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Brexit: why the Retail & Leisure industries need to get radical with their people strategy

Alex Doman

Within Retail and Leisure, there is one Brexit certainty: management teams need to be more inventive about how they staff their businesses. Here’s why, and how to do it.

When it comes to Brexit and the Retail and Leisure industries everyone wants to know what will happen to immigration and the free movement of people.

But amongst all the guff and indecision – Hard Brexit, Soft Brexit, No Brexit or No Deal? - one thing is certain: businesses will have to get more inventive about how they staff their businesses whatever happens.

This is what we know to be true:

1. The data collected to date shows that many of those who voted Leave, did so on an anti-immigration agenda. More recently it has been shown that the Brits aren’t necessarily anti-immigration but, overall, are anti open borders. In the latest stats by Ipsos Mori only 18% of respondents said that more low-skilled workers should be permitted in the UK. However, they were kinder about high-skilled migration with 52% agreeing that more high-skilled workers should be permitted.

2. Therefore, the only thing political will is unified around is the need to reduce - or modify - immigration levels. This can be considered the only surety coming out of the Brexit referendum so far.

3. However, the British economy currently relies on immigration – without whom the economy would have ground to a halt (see below)[1].

4. This is particularly true in Retail & Leisure. Around 1/7 workers in the Retail & Leisure industries were born outside the UK; and Brits are not as willing to work in these sectors as migrants are. Indeed, Andrew Wareham – the HR Director at Pret – told the House of Lords Economic Affairs Committee that only 1/50 applicants were from the UK.

5. While this is an issue, it is only a very significant problem in the South East of England, where the majority of EU migrants reside.

6. Additionally, with the introduction of the National Living Wage, relative wage costs are going up – not to mention rising rates and import costs.

The result of all this is that, whatever happens with Brexit, labour pressures will only increase. Therefore, businesses should look to take action now by either:

1. Increasing the labour supply through:
a. helping the government persuade Brits back to work. There are currently 1.5m people who are unemployed and 8.8m who are economically inactive. Some of these are being targeted already through schemes such as that for apprenticeships – however there is room for greater collaboration between business and government on this issue.

b. getting innovative about who they employ and when. There are certain groups in the UK – e.g. those of retirement age, students, ex-offenders and those with disabilities – who could be enabled to work with the right mindset and government support.

c. persuading the government to maintain “acceptable” levels of migration (from inside or outside the EU). Regardless of what happens, the UK economy will need migration and lots of it. Businesses must work harder to explain the benefits of migration both to government and to the population.

2. and/or adapting by becoming more efficient or taking human labour out of their businesses:
a. Retailers have been automating roles for years – think self-service tills – however, there is much further to go. We expect this trend to continue: for interesting innovations in this space see Mishi Pay, which allows customers to pay as they shop. While the Leisure industry has been historically reluctant to automate, many of the big players are now investigating how to do so. The more expensive labour gets, the more tempting it becomes to make capital investment in increased productivity. We expect to see automation and cost-cutting projects to continue apace across both sectors.

b. Getting better at getting the right people. With a limited supply of people – getting exactly who you want will become more important. Targeting the right people and rewarding them holistically will become more important than ever.

Conclusion When it comes to staffing and people budgets, the bottom line is: don’t wait to figure out what is going to happen with Brexit, because one thing is certain - employing people in low-skilled jobs is set to become harder and more expensive.

[1] Oliver Harvey; “Don’t Look Back in Anger: Brexit, immigration and the exchange rate”; Deutsche Bank; 8th March 2017

Alex Doman

Alex is an engagement manager with Stone & River, focusing on strategy, proposition design and innovation for consumer facing organisations.

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