HR & Management

Lidl applies pressure to larger supermarkets by promising Living Wage

5 min read

18 September 2015

Former deputy editor

Fresh from a commitment to open 300 extra stores in London areas, Lidl has applied fresh pressure to larger supermarkets as the firm commits to the Living Wage.

Germany-headquartered Lidl has made it abundantly clear it plans to take no prisoners as the supermarket war heats up. Seemingly strategy is everything for the company, as its announcements tend to follow those of its rivals – outshining them each time.

In August, Sainsbury’s made a huge move when provided a four per cent pay rise to its 137,000 store colleagues, which it called their “highest pay increase in over a decade”.

The standard rate of pay was increased to £7.36 and Sainsbury’s was eager to highlight that its full-time staff would be paid more than Tesco, at £287.04 and £269.74 respectively.

“We know what a difference they [store colleagues ]make to our customers each and every day and we’re totally committed to rewarding them well for the great service they provide,” said Mike Coupe, Sainsbury’s CEO.

However, Lidl’s promise to embrace the Living Wage from 1 October will make it the first British supermarket to do so. The decision will result in all Lidl UK employees nationwide receiving £8.20 per hour, spiking to £9.35 per hour in London.

Per year, the average wage is set to grow by £1,200 annually for most employees, while 53 per cent of the 17,000 strong workforce will benefit.

“At Lidl UK we are proud of our achievements, proud of our growth, and proud of our unwavering commitment to our customers and quality products, but most of all we are proud of our employees who make everything possible,” said Ronny Gottschlich, Lidl UK CEO.

Read more on the Living Wage:

The Living Wage launch comes after full-year sales reached over £4bn to mark a new record for Lidl. It’s a stark contrast from Tesco, which announced a £6.4bn loss in April – the worst in its 96-year history.

The CEO of the UK’s largest supermarket, Dave Lewis, is eagerly trying to turn around the fortunes of the floundering firm and the latest effort in his campaign was to sell off the Korean arm of Tesco for £4.2bn. He’s also been making a series of redundancies to ease financial woes.

Lidl, meanwhile, has said the Living Wage investment will cost the company £9m. Other firms like Costa have warned that the price of products will increase to balance out the additional staff costs, but Lidl’s low prices are set to remain in place.

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Gottschlich continued: “We recognise that every employee forms an integral part of team Lidl, and each individual’s contribution is valued. It’s therefore only right that we show our commitment, in the same way that the team commit to the business and our customers each and every day, by ensuring a wage that supports the cost of living.

“As a result, Lidl employees will be amongst the best paid in the supermarket sector, and that’s something I feel incredibly proud about.”

The company is also planning an expansion by opening 300 small and medium-sized stores in London areas, such as Chelsea and Notting Hill, to challenge the likes of Waitrose.

Comparatively, Morrisons has just revealed it’s selling more than 40 small stores for just £25m and expects a £30m loss on the deal. The decision was made as the number four supermarket conceded it would have required considerable investment to make the local venture a success.

Discussing its growth plans for the small local sector, Richard Taylor, Lidl UK property director, said: “As we continue with our ambitious store expansion programme across the UK we’re seeing strong demand, particularly within the Greater London area, for an intelligent retail choice like Lidl.

“The nature of our store concepts mean that customers will be able to carry out their full weekly shop no matter which store they visit, and have confidence that prices will remain consistent across all locations. We are looking forward to offering our fantastic value and quality products to more customers, as well as bringing new jobs and investment across London in the not-too-distant future.”