Ikea and Majestic, which are both members of the Living Wage Foundation, claimed today that paying the higher voluntary rate is great for business.

A year after the Government ruffled retailer feathers with the introduction of the compulsory national living wage, the two retailers said paying higher wages has helped shrink staff turnover rates.

Ikea UK boss Gillian Drakeford told delegates at Retail Week Live that the furniture retailer’s staff turnover has fallen to less than 20% since it started paying the higher voluntary rate of £8.50 per hour and £9.75 in London.

She also said it has spurred employee engagement and, consequently, growth.

“We’ve seen improvement in the customer experience and growth across all parameters.

“For me, it’s very much related to engagement. If we take care of the co-workers, they will take care of the customer.

“That keeps shoppers coming back. It’s better business,” Drakeford said.

Majestic Wine

Likewise, staff turnover at Majestic has dropped from 36% to 26%, since the wine specialist bumped-up its rates of pay and gave all employees shares. 

Contributing to the same panel discussion at Retail Week Live, Majestic operations director Rob Farnworth said: “It’s an investment. Our customers told us they wanted to see the same staff – they wanted the same wine chauffeur, for example.

“At the same time, staff didn’t feel rewarded and wanted more pay.

“We’ve started to see a return on the investment already, plus labour turnover has fallen so there’s less recruitment needed.

“It’s about growth of the business rather than paying people more. If it makes customers come back more frequently, it’s self-funding.”