Next has warned of price rises and staff shortages before Christmas unless immigration rules are eased.
The High Street retailer stated that some areas of its business, such as warehouse and logistics staffing, were “beginning to come under pressure.”
It attributed the increase in prices to higher shipping costs, particularly for larger furniture items.
The Home Office stated that it is collaborating with industry to “understand how we can best ease particular pinch points.”
Next, he urged the government to “take a more decisive approach to the looming skills crisis,” claiming that the lorry driver shortage had been “foreseen and widely predicted.”
The company issued a warning about potential staffing issues during the holiday season in its half-year results, which showed a 5.9 percent increase in profit before tax compared to 2019.
Rising shipping costs, according to the company, have increased prices by about 2%, with larger home products “bearing the brunt of the increase.”
It also predicted that prices would rise by an average of 2.5 percent in the first half of next year, with homeware prices rising by 6 percent.
Next CEO Lord Wolfson stated that the company is not currently having difficulty recruiting staff for its stores, but warned that warehouse and logistics staffing is “beginning to come under pressure.”
“We anticipate that unless immigration rules are relaxed, we will see some degradation in our service in the run-up to Christmas,” he said.
“We want to see employers make long-term investments in the UK domestic workforce rather than relying on labour from abroad,” a government spokeswoman said.
“The government encourages all sectors to make employment more appealing to domestic workers in the United Kingdom by providing training, career opportunities, wage increases, and investment.”
Lorry driver shortage
Many UK industries, from fuel companies to supermarkets, are currently experiencing supply chain issues as a result of a chronic shortage of truck drivers.
According to industry bodies, the UK has a 100,000-strong driver shortage, which has been exacerbated by the pandemic, tax changes, Brexit, and an ageing workforce.
The recent supply chain problems led to the UK government announcing it will grant temporary visas, lasting until Christmas Eve, to 5,000 fuel tanker and food lorry drivers and 5,500 poultry workers.
Lord Wolfson was a vocal supporter of Brexit in the run-up to the referendum, but he has been critical of the government’s post-Brexit immigration policy.
He has stated that imposing a minimum wage of £30,000 was a mistake.
“The HGV crisis was foreseen, and widely predicted for many months,” Next said in a statement. We hope that the government will take a more decisive approach to the looming skill crisis in warehouses, restaurants, hotels, care homes, and many seasonal industries for the sake of the wider UK economy.
“It is now critical to take a demand-led approach to ensuring the country has the skills it requires.”
‘Golden girl of the high street’
The company’s performance in the six months to July was largely driven by an increase in online revenue, with sales increasing by 52% compared to pre-pandemic levels.
Lord Wolfson stated that the retail rebound from the coronavirus pandemic was “far stronger than we expected.”
“Retail sales have performed better than expected, while online sales have declined less than expected.” For the time being, it appears that the broader economy has not suffered the long-term damage that many feared. And, in particular, employment has performed admirably,” he added.
For the fourth time in six months, the retailer increased its full-year profit forecast.
Hargreaves Lansdown equity analyst Sophie Lund-Yates said Next’s “ever-growing” online business had led it to brush off the “worst of the woes brought on by lockdown.”
“Then there’s the golden girl of the high street,” she explained.
“The High Street star has not escaped the country’s labour, supply, and cost issues unscathed.”
“While things are currently stable, a lack of foreign workers means that some Christmas deliveries may take longer to arrive during the peak trading season.”