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Boots and Lloyds warn of ‘unsustainable’ stores after living wage rise

Boots and Lloydspharmacy have warned that the combination of a living wage increase and current business rates will result in more “unsustainable” high-street locations.

The government announced in December that the national living wage for over-25-year-olds will rise by 6.2% – from £8.21 to £8.72 – in April.

Boots told C+D that while it “supports the government’s direction on living wage”, the “increased cost to deliver this comes at a time of huge pressures on high-street retailers – not least due to the current business rates environment”.

“This may result in a further shrinking of the UK high street as more locations become unsustainable,” said the multiple – which is currently scheduled to close 200 branches by the end of the year.

Lloydspharmacy: “Financial squeeze”

Lloydspharmacy also told C+D that the living wage increase is “one of a number of rising costs that continue to squeeze our business financially”.

“The combination of these increasing costs, alongside a static funding framework, makes it hard for us to operate our pharmacies sustainably,” it said.

“It also hampers our ability to invest and innovate, which ultimately will affect our customers and patients,” it added.

While Lloydspharmacy stressed it is “committed to paying our employees competitively”, it admitted it was “surprised” to see that the living wage increase will be “higher than anticipated”.

It also reiterated its call for community pharmacies to be granted the “same business rate relief that other NHS contractors, such as GPs and dentists, have”.

AIMp: “Further pressure”

The Association of Independent Multiples (AIMp) told C+D it recognises “the needs of our staff to work within an environment that offers a rate of pay that is in line with the cost of living and supports the government’s move”.

However, it agreed with Boots and Lloydspharmacy that “the increase will place further pressure on pharmacy contractors, who will not be receiving any increase in funding to offset the higher wage costs they will have to incur”, AIMp CEO Leyla Hannbeck said.

“Many will look to reduce operating costs in an effort to control the cost of employment,” Ms Hannbeck told C+D.

“AIMp will be liaising with our members to [conduct] an impact assessment,” she added.

What impact will the increase in the national living wage have on your business?

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