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With money too tight to mention throughout the retail industry, how are salary levels for our hard-working managers faring? Mark Flesch, director at specialist recruitment consultancy Retail Human Resources, provides a market snapshot.
Remuneration is a hot topic at the moment. The news media has been boiling over with indignant commentators expressing outrage at the decision by some banks, banks that had required public money to keep them afloat, to award millions in bonuses to their staff. It's certainly counter intuitive to be ostensibly rewarding senior executives for failure, irrespective of their legal entitlements to the money. Then again, how far can you penalise middle and junior managers who have achieved contractual targets for decisions they had no part in making? No matter what any headline-grabbing politician tells you, it's by no means a black and white issue.
While the remuneration picture for the retail industry's managers is far less controversial, it remains understandably high in the list of their workplace concerns. Arguably it is only since the current period of volatility hit the UK economy and the retail industry specifically that salary might have slipped behind job security as the top priority. What is not up for debate is that management professionals within the retail industry are having to work both harder and smarter just to keep things ticking over.
But while all acknowledge that the market is tough and getting tougher, there remain some sectors of the retail industry that have been weathering the storm better than others. Mid-market fashion has had a torrid time, losing much market share to their discount/off-price counterparts. That is not to say that there have not been successes in this sector, there have been many in fact, the difference on the high street today is that customers have been far less forgiving of ranges and price points that fell below expectations. When money is tight, you only buy what you really like or you really need - and when money is tight, shopping trips more often start in stores offering cheaper goods. Where the likes of Primark and Top Shop have really succeeded is in combining the right looks for their traditional client base at prices that have attracted new customers.
The homewares and DIY markets have also suffered over the last 12 months - much of their torment stemming from a petrified (in all senses of the word) housing market. The potential benefit to first-time buyers from plummeting house prices has been to a large degree offset by banks' reluctance to lend anyone any money. At the moment they are even reluctant to lend each other money. This lack of fluidity has resulted in the demand for property taking a spectacular nose-dive. As and when the purse strings are relaxed a little (which will no doubt require serious government arm-twisting) and people start buying houses again, the DIY and homewares sectors can expect a genuine renaissance.
The big food multiples have all shown considerable resilience to the effects of the credit crunch, largely maintaining or expanding their market share. Moreover, in the last month each of the biggest players, Tesco, Asda, Sainsbury's and Morrisons, has announced their intention to recruit thousands of new employees in 2009. Such a show of strength and stability is very welcome relief among the consistently negative economic headlines. Even within this generally successful sector there has been a pattern to the degree to which the success has been enjoyed. Those with reputations for economy have done especially well, with 'hard discounters' such as Lidl and Aldi making spectacular gains in customer numbers and market share.
Despite the tempestuous economic conditions being endured by retailers, however, there has been little in the way of corresponding fluctuations in managers' salary levels. Neither has there been any great shift in the level of bonuses or benefits being offered The salary information provided by RHR's database of more than quarter of a million retail candidates suggests that over the past 12 months salary increases have been consistent with previous years, with a median increase of around 3%.
Those areas of retail management with some degree of specialisation (such as pharmacy, bakery or butchery for example) in which there are fewer available candidates are more likely to offer higher salaries and incentives. But this again reflects salary patterns of previous years.
Retail Management: General Merchandise
| Turnover | Headcount | Min. | Max. | Typical | |
|---|---|---|---|---|---|
| Regional Manager | 20m+ | 150 | £45,000 | £60,000 | £50,000 |
| Store Manager | 5m-10m | 100 | £30,000 | £40,000 | £38,000 |
| Store Manager | to 5m | 60 | £28,000 | £35,000 | £32,000 |
| Deputy/Assistant Manager | - | 20 | £20,000 | £30,000 | £26,000 |
| Sales Manager | - | 15 | £20,000 | £25,000 | £21,000 |
| Supervisor | - | 8 | £15,000 | £20,000 | £16,000 |
As the tables of data suggest, the principal factors affecting salary levels over the past year are the same as they have always been: turnover and headcount. The largest salaries available across retail are earned by those professionals responsible for the largest turnover. Thus managers at the huge food hypermarkets that generate millions of pounds each week and who oversee hundreds of staff command the industry's top wages. To a lesser degree location can also impact on salary levels offered by retailers. In order to recruit, most employers offer terms that reflect to some extent the local cost of living. In the past this meant that wages in London and the South East stood apart from the rest of the country - the somewhat inaccurately described North/South divide.
While this type of 'London weighting' still exists of course, geographical salary bias isn't simply a function of cost of living. Increased competition for candidates within a given area can also impact on salaries. Where there are large retail developments requiring thousands of retail employees, for example, salary levels are often higher than the regional average. Similarly, wages tend to be elevated in areas that pose recruitment difficulties - where there is low unemployment for example. Just to throw a further variable into the mix, individual employers have their own approaches to salary structure that don't always adhere to the industry norms. To help iron out this array of potential anomalies, we have included a median salary level for each position - a better indication of a typical salary than stating an average level.
Going forward, the prospects for increases in salary levels are low. With falling inflation and rising concerns about the likely severity of the current recession, there is no real pressure for the majority of retailers to follow past salary growth. And with external recruitment, for now at least, clearly not a priority for many retailers, there is very little to push the cause of higher salaries. Given the blanket coverage of the economic slump, this is unlikely to surprise many employees many of whom - if not most - are already battening hatches, tightening belts and crossing fingers that hard work will see them through the crunch.
The ultimate determining factor when it comes to future salary levels will, of course, be the length and depth of the economic slump. Retailers, like everyone else in the UK at the moment, will need to keep their eyes peeled for those fabled green shoots of recovery.
