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6 Things You Can Do To Combat Rising Minimum Wages

Across most of this country (Canada, that is) and many parts of the world, minimum wage rates are going up drastically; in many places by as much as 30%.  That’s a big chunk out of anyone’s bottom line.

For retailers, it’s about finding a way to maintain profitability and at the same time maintain the brand experience.  That’s not an easy task when one of your biggest expenses goes up … a lot!

Here are 6 solutions you can consider adopting to combat rising minimum wages.

  1. The “Cut” Strategy
    This is the usual strategy, where you cut staff hours, store hours, benefits and incentives. There’s some logic here, but be cautious; this may be part of your Race to the Bottom.  Retailers have learned that the easy cuts aren’t always the best ones. Consider the fallout to your store experience, and to the staff who represents your brand.
  2. The Technology Solution
    As labour gets more expensive, technology becomes a more viable option. Self-checkout, mobile checkout, traffic counters, digital assistants, robots, automated scheduling and more are all possible solutions to reducing labour, while still possibly maintaining the store experience.  Another option is to look to technology to boost employee productivity, thereby offsetting the increase in wage costs.
  3. The Performance Management Solution
    The problem with your wage cost isn’t that you’re paying your top performers too much money. It’s that you’re paying your bottom performers too much money!  Performance management adopts a constructive but more assertive approach to managing and improving the performance of everyone on the schedule, especially the bottom performers.  Turn your “C-Level” performers into “B-Level” performers and you likely solve much of the increasing minimum wage challenge.
  4. Your Staff Is the Solution
    You need to view your staff as the solution, not the problem. The only differentiator from one store to the next is the quality of the in-store experience, led by the staff.  Invest more time, resources and energy into developing your staff into top level performers.  30 years into this business, we’ve seen over and over again staff drive performance much higher when they are given the right training, coaching and support.
  5. The Finding Efficiencies Solution
    If wages are going up, something else likely has to come down. 60 to 70% of what most retailers spend isn’t on wages … it’s on something else.  Did you know that for a retailer who operates with a 5% bottom line, cutting just $200 per month from an expense produces the same bottom line impact as selling $48,000?  Look at every dollar being spent, and find a way to ‘shave’ it down.
  6. The Raise Your Prices Solution
    This is likely the inevitable solution for most. Maybe not in the short-term, but certainly in the mid-term.  The good news is that most items you sell aren’t as price sensitive as many think they are.  It’s a balancing act, and no one wants to go first, but there’s more margin in your store than you’re likely already getting.


Here’s my final thought:  These dramatic increases in minimum wages will likely (finally) force retailers to run store operations with as much precision and dedication as they do the back end of the business.  Retail has jumped light years ahead over just the past 10 years in the areas of logistics, supply chain, CRM and IT.  Store operations has been all too often treated as a ‘second cousin’.

Now is the time to invest properly in store operations.

Blog Authors: Kevin

Kevin Graff

Kevin Graff is the main guy behind all things Graff Retail. A renowned retail expert, Kevin is recognized in the retail industry as a speaker, author and expert trainer. Kevin's main passion is to help retailers drive staff performance.

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