Wages pressure to hit retail, warns BWG boss
Increasing wages and other costs such as high insurance premiums will make it very difficult for retailers in 2019, the CEO of BWG, Leo Crawford, has warned.
BWG, the owner in Ireland of the Spar and Mace chains, will deliver double-digit profit growth for the year to September 2018.
But Crawford has concerns for the following financial year. "The existing business has to continue to grow but preparing a budget now for 2019 will be slightly more challenging because of some of the cost pressures, particularly in respect to the whole labour cost situation," he said. "But that's the challenge for us, to get growth again."
He said that 2019 would be the most challenging year for the group since Spar South Africa took an 80pc stake in the business in 2014.The Irish business has a profit before tax for the year end to September 2017 of €29.8m.
"One of the issues now in our business and in any business in Ireland, is on the one side we're at full employment - which is fantastic in terms of my consumers. But there's a supply-and-demand issue, getting people to work for you at rates that you have is now a problem, so you've got to improve your wage rates.
"If your top line is only growing by 3pc and if your costs - our main cost is people - is growing at a faster rate that's a huge challenge now for Irish business. The mathematics are challenging, because we're all running businesses where we're expected by our shareholders to grow our business."
He said many businesses were growing through acquisitions, and BWG is interested in buying more businesses having recently acquired wholesaler 4Aces, a supplier to Gala, a rival convenience brand.
Sunday Indo Business