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

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Boots: National living wage increase "may result in a further shrinking of the UK high street"
Boots: National living wage increase "may result in a further shrinking of the UK high street"

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.

6 Comments
Question: 
What impact will the increase in the national living wage have on your business?

Benie I, Locum pharmacist

These clowns pay less than budget supermarkets and they're complaining but heap untold work and pressure on their unfortunate employees !!

Benie I, Locum pharmacist

Translation : 

Wage cuts and redundancies.

Locum Pharmacist, Locum pharmacist

They will just take it out of the locum again following their recent steal of £2 per hour off the rates.We will pay their wages.

 

Leon The Apothecary, Student

We have to pay people wages that mean that they don't live in poverty and now we realised we can't afford to run a business ethically.

That's the message I'm getting from that.

Mark Boland, Pharmaceutical Adviser

The reason why UK business delayed the investment in labour replacing technology is that wages have been supressed for so long that the use of humans was still viable. This wage increase with just lead to the earlier introduction of automation in those industries that lend themselves to such innovations - like community pharmacy.                                                                  

C A, Community pharmacist

The way I read it, they will just close the non-viable branches and let others pick up the slack (or merge branches and keep the staffing levels to a minimum).

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