GOOD JOBS IN RETAIL A TOOLKIT How to move to a Living Wage and maximise the benefits Acknowledgments Introduction his toolkit was written and The Living Wage Foundation t is often assumed that higher In an era where customer Tdeveloped by Tess Lanning would like to thank Emma Iwages in labour-intensive service service is increasingly important, and Luke Murphy for the Living Morton, David Shears, Robin sectors are ‘bad for business’. many retailers are looking at Wage Foundation, with support Winstanley, Rose Stott, Rona But the decision by leading retail how to best invest in and engage from EE, IKEA, BrewDog, Cook, Anna Parfitt, Jacqueline and hospitality employers to go their employees. Hobbs, Paperchase and KPMG. Rouse, Rachel Bowman, Simon beyond statutory requirements to Luscombe, Paul Jamieson, Peter pay their staff the Living Wage has This Good Jobs Toolkit provides a It is kindly supported by Scraton and Sam Dodds for their confounded the traditional view of practical ‘how-to’ guide, drawing the Department for Work advice and input. We would also how to succeed in these sectors. out lessons from leading Living and Pensions and the UK like to thank Professor Zeynep Wage employers and other global Commission for Employment Ton for enabling us to draw on From fast-growing UK-born retailers about how to provide and Skills as part of the UK her ground-breaking research on companies such as the brewery value for customers and investors, Futures Programme – a series of the operational strategies that and bar chain BrewDog, to the while also creating jobs that are productivity challenges testing underpin a ‘Good Jobs Strategy’ global low-cost furniture giant better paid, more stable and more innovative solutions with in retail and for her invaluable IKEA, accredited Living Wage meaningful for employees. businesses to identify ‘what support during the project. employers are demonstrating that works’ in addressing workforce the companies best placed to development problems. succeed in the 21st century will be those that put the customer-staff relationship at the heart of their business model. 2 livingwage.org.uk livingwage.org.uk The Living Wage Structure Campaign of the he campaign for a Living Wage This is lower than the voluntary Tbegan in 2001. Communities Living Wage rates, which are in East London came together independently-calculated based on report to discuss what changes would what people need to meet the basic improve their lives. Parents spoke cost of living, cover all workers over of the hardship they faced living 18, and include a separate rate to The first half of the report examines on poverty wages. At the time the reflect the higher living costs in the the hidden costs of low skill, low National Minimum Wage was just capital. In 2016 these were set at pay business models in retail, and £3.70 an hour, and many of them were £8.25 and £9.40 in London. how Living Wage employers and working two jobs and still struggling to make ends meet. By mid-2016, there were over 2,500 other leading global companies The second half provides a practical accredited Living Wage employers, are challenging this approach by guide for employers that want to The Government’s new minimum including nearly a third of the FTSE- combining great customer service move to a Living Wage and maximise wage rate for over 25 year olds – 100. More than 100,000 employees with decent jobs for their staff. the benefits. We offer advice on how badged a ‘national living wage’ – was have seen their wages increase to make the case for a Living Wage, 2 a huge win for the 15-year campaign as a direct result of the campaign ensure it helps you to achieve your to tackle in-work poverty. However, and well over a million employees long term business objectives, and the new wage floor came in at £7.20 are covered by Living Wage manage change effectively. If you in 2016 and is due to rise to over £9 accreditation agreements. want to go straight to the practical by 2020, based on a target to reach 1 guide, turn to page 21. 60 per cent of median earnings. The Living Wage rates are uprated in November each year based on The Toolkit is the product of a year- the best available evidence about long project testing the operational the trends affecting people’s living strategies that support higher paid, standards. The methodology is higher skilled jobs in retail through a overseen by the Living Wage series of innovative workplace pilots Commission – an independent body with major retailers, with advice and drawn from leading Living Wage input from KPMG and Living Wage accredited employers, trade unions, employers across different sectors. civil society and experts. 4 livingwage.org.uk livingwage.org.uk 5 he retail and wholesale sector The use of short-hours contracts is Tcontributes £180 billion to the commoniv, and research estimates UK’s economic outputi and employs that 40 per cent of wholesale and nearly five million people, making retail employers provide no training it the country’s biggest employer.ii for their staff.v Yet the sector is facing a challenging business environment. Established players are feeling the pressure IN A SECTOR THAT from lower-cost entrants. The rise OPERATES WITH TIGHT of online shopping has also driven PROFIT MARGINS, up operational costs and led to a fall EFFORTS TO IMPROVE in the number of people entering COMPETITIVENESS OFTEN 1 physical stores. FOCUS ON REDUCING STAFF COSTS In a sector that operates with tight profit margins, this highly A case competitive context has led to an These problems have got worse ongoing drive to control costs. in recent years, as many retailers Labour is the biggest and most responded to the downturn with cuts for change: tangible cost to retailers. Efforts to to staff training budgets, real terms improve competitiveness therefore reductions in pay, and a move to often focus on reducing staff more part time and agency staff. spotlight on retail costs – with measures to limit the cost of employee pay and benefits, A report in 2015 commissioned by minimise investment in training and the Joseph Rowntree Foundation match staffing levels and contracts found that low paid workers in to patterns of customer traffic as the service sectors described closely as possible. their jobs as stressful, unfulfilling and precarious. Most of the retail As a result, low wages, chaotic workers interviewed for the research schedules and a lack of training and had experienced cutbacks in hours progression opportunities are often and many were not paid for breaks seen as an inevitable feature of jobs or overtime.vi in the sector. 1.5 million people in wholesale and retail are low paid – making up nearly a third of all low paid people in the UK.iii livingwage.org.uk 7 The hidden costs of bad jobs his is not just bad for Operational complexity has grown at A vicious cycle? employees. Many employers the same time as many retailers have T hen sales and profits are The study estimated that profits are also concerned about the reduced investment in staff, driven falling, managers often would have been 25 per cent higher sustainability of this strategy, which by bigger product ranges, more W reduce labour costs, with staff hours at Borders had there been none of is associated with high levels of staff complex service offers and frequent and training budgets the first to these so-called “phantom stock- turnover, absenteeism and loss of promotions. There is increasing see cuts. This delivers short term outs”. Over time this problem stock to theft and error (‘shrinkage’). recognition that this complexity has savings. But in the longer term seriously undermined the company’s increased costs and can exacerbate understaffed stores with poorly ability to respond to changing The negative image of the sector and stock management problems and trained, demotivated staff are customer tastes by integrating its lack of progression opportunities poor customer service. viii often associated with operational store and online operations through mean that retailers often struggle problems that undermine store a click-and-collect service.ix Borders to attract or retain recruits with the sales and profits. was one of the first casualties of right skills and attitude. Low levels MANY EMPLOYERS ARE the rise of online retailing, and of training exacerbate problems CONCERNED ABOUT A study conducted by the leading eventually filed for bankruptcy such as poor customer service, a THE SUSTAINABILITY OF MIT operations expert Professor in 2011. lack of product knowledge, and weak LOW WAGE STRATEGIES, Zeynep Ton at global bookstore problem-solving, organisational WHICH DRIVE HIGH STAFF Borders at the peak of its success These operational problems are live planning, leadership and strategic TURNOVER, ABSENTEEISM found that high employee turnover issues in the UK. Loss of stock due to management skills.vii AND SHRINKAGE and understaffed stores were crime, waste and error costs British systematically hitting business retailers more than 1.3 per cent of These problems have indirect and performance. A combination of sales.x One survey found that over direct costs to employers. Low price retailers in particular high workload and complex, badly- a third of customers had left a shop are often seen as synonymous designed operating processes empty handed in the previous month with demotivated, overworked resulted in misplaced products and due to poor stock management, and undertrained employees, long a failure to replenish stock. One in costing retailers £1bn a month in check-out queues and disorganised six customers who approached a lost sales. The study found that stock management.