Alarm bells ring as skills gap widens in retail

A gulf between the number of skilled candidates and job roles available is impacting the growth of many retailers. Steve Smith, managing director at Hitachi Capital Invoice Finance explains this skills gap in retail.

Research we conducted with specialist retail recruitment companies has revealed that the sector is facing a growing skills gap. 89% agreed that a mismatch of skilled candidates against open job posts is the biggest challenge the industry is facing.

This has given rise to a number of retail consultants charging a premium for their services and acting as contractors to help businesses navigate a tricky period. Over three quarters (76%) also said they had seen an increase in demand for temporary and contract staff as a result.

The retail sector has experienced a turbulent time of late, with the impact of a widening skills shortage and introduction of a national living wage set to add further pressures to a growing problem.

Another limiting factor in the recruitment drive for retailers is the introduction of new immigration laws which will take effect from April 2016. The laws will prevent all non-EU Economic Area workers from staying in the UK for more than 5 years, unless they earn over £35,000 per annum. Our research also uncovered that 76% of specialist retailer recruiters feel the changing immigration laws will cause a further reduction in available candidates.

The cost of recruiting staff is therefore rocketing. The skilled candidates are few and far between and the current pressure on the big retailers is having a direct impact on small suppliers further down the supply chain. As the larger firms continue to tighten their belts and seek to drive down costs in other areas of the business, this is causing some to pay their suppliers later than the usual 30-60 working days. Britain’s small businesses are still feeling the impact of the recession which has meant that some are now waiting an average of 11 days longer for payment than they were even at its height. Our analysis of client debtor days also revealed that some of the worst offending firms take up to 121 days to pay outstanding invoices. The rationale behind larger retailers paying late is that the longer firms are able to hold onto money and keep cash in the business; it allows them to strengthen their position and make funds work harder. Many businesses adopted this approach during the recession as a result of their low business confidence and cautiousness over market conditions. However, it’s the small-scale suppliers that feel the brunt of this.

In order for retailers and those within the supply chain to protect their cash positions and grow, businesses need to be more creative and explore the available finance options. Companies often overlook invoices as one of their biggest assets and by unlocking the money tied up in unpaid invoices at a time of uncertainty, retailers and suppliers can invest in new stores, machinery and the extra staff to create further demand and meet it. Using tools like chaserhq.com can help with chasing invoices and ensure that any outstanding invoices are paid on time.

Only those brave enough to make efforts to increase their service levels will come out stronger in this skills gap. Retailers should see the current challenging period as a time of opportunity rather than one to put plans on hold.