As Kurt Stuhllemmer, partner at Hall & Partners, examines, how retailers treat their staff is an increasingly valuable metric in the eyes of consumers.
A host of the UK’s biggest grocery retailers – including Lidl, Co-op, Aldi, Tesco and M&S – have announced wage increases for employees in recent months.
While the news highlights a commitment to social responsibility that is encouraging, it is unusual to see such fanfaring on the topic of staff salaries. It suggests that retailers want to retain workers – perhaps even entice them from competing retailers with higher pay – as well as ensure that they are fairly rewarded for their hard work.
Aldi (pictured), for example, boasted the highest level of pay by a British supermarket, labelling its ‘colleagues’ as the best in the business.
Doing The Right Thing
Yet, there’s likely to be a bolder goal in play, particularly with retail footfall recently having seen the steepest drop since the pandemic. Supermarkets are waking up to the importance of being ‘seen to be doing the right thing’ in the eyes of customers.
It is clear that they want news of staff rewards to reach further than employees and potential employees, and are trickling some positive brand messages to customers and shareholders, too. This is because they understand how the way that they treat their staff has become important to consumers, too.
Indeed, our 2023 Value Shift study, which researched 2,000 UK consumers about their attitudes to brands, found that the way that retailers treat their employees is foremost in the minds of consumers, particularly as they continue to adopt a discretionary lens for everyday purchases in the face of a continued high cost of living.
For consumers, this matters almost as much as being rewarded for loyalty through good deals and incentives. Nearly half (45%) of UK consumers want brands to support staff and keep people employed. This compares to 60% who expect good deals and incentives and 52% who want to be rewarded for their loyalty.
Playing Fair
Shoppers are also increasingly prepared to switch when brands don’t play fair.
When Amazon workers staged a Black Friday strike last year over worker’s rights, the campaign drew support from campaigners and citizens in more than 30 countries, who organised protests in solidarity to hold the company accountable.
Amazon is not the only big company wherein worker discontent has led to strike action. Workers at Asda in Suffolk recently voted to strike over cuts to working hours and falling standards that pose a risk to health and safety.
Governments are also behind improving workers’ rights. The EU recently passed a directive to ensure fair treatment of gig economy workers, including food and grocery providers, while the UK’s Labour Party New Deal for Working People sets its stall with a flagship policy focused on boosting people’s pay. The party’s ambition to ensure a fair day’s pay for a day’s work has the potential to be transformative to workers’ lives.
So, while not all people will condemn retailers that fall foul of their social obligations, the pressure is on, as governments get involved for the good of society and the economy.
This also means that the way retailers treat employees and the support they provide for communities are levers that they can use to engage with consumers.
Retailers need to work harder to meet the needs of all stakeholders, showing how they are helping society, not destabilising it. Only by measuring customer loyalty as one of the key building blocks of brand growth can brands truly adapt to these changing expectations.
Understanding where the ‘nudge’ points are that can shift consumers closer – or further away – from a retailer is key. Increasingly, it seems that consumers are forcing retailers to step up for their employees, and those that don’t, risk being vilified.
