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Coronavirus bonuses for 'heroic' front-line supermarket store staff

“It is good PR but more importantly it’s good labour relations,” said one analyst

Marks and Spencer Group PLC -

More food retailers have offered their store staff a bonus for working on the coronavirus ‘front line’, putting pressure on all supermarkets to similarly reward their workers.

Clive Black, head of research at Shore Capital, pointed out that the supermarkets are incurring considerable cost growth and very volatile trading patterns. 

“That said their front-line staff have been a little short of heroic and it could be envisaged, for example, that business rate relief could be utilised to offer some expression of thanks to their teams.”

M&S and B&M

With industry data showing coronavirus was driving record sales for grocers, on Wednesday, both Marks & Spencer Group PLC (LON:MKS) and B&M European Value Retail SA (LON:BME) said they would reward certain staff with extra pay.

M&S said it would pay store and supply chain staff 15% extra pay in recognition for their work during coronavirus outbreak.

Discounter B&M said its store and distribution workers in the UK were being paid a “10% enhancement" to pay rates to “reflect the additional workload that the guidelines impose” through what has been a challenging time for the country.

B&M, which also said it is closing 49 of its 656 of its smaller UK stores with staff furloughed with 80% pay from the government, said also opened up its staff discount to “all NHS workers” and said it will donate £1m worth of food and toiletries to food banks.   

While its B&M and Heron Foods stores remain open, the FTSE 250 company’s 101 French shops have all been closed under the government’s lockdown measures. 

Tesco an early mover 

Tesco PLC (LON:TSCO) was one of the first to say it would be paying staff extra, last month announcing a 10% bonus on the hourly rate for hours worked for staff in stores, distribution centres, customer engagement centres and front-line salaried managers, backdated to Monday 9 March.

This week, Tesco also joined other retailers such as Wm Morrisons Supermarkets PLC (LON:MRW), Asda, the Co-op and Waitrose in increasing its donations to local community organisations and charities.

The package from Tesco, which has hired more than 35,000 new staff to cope with the surge in sales, included upping its usual £3mln of food donations to £15mln of donations to food bank charities  FareShare and the Trussell Trust over the next 12 weeks, plus £1mln apiece of cash donations to both charities.

Recognition

However, if supermarkets are included in the government’s promised 12-month business rates holiday that could total £2.7bn across the industry, according to figures from the Grocer magazine.

Of this, Tesco could be in store for a £700mln bonus of its own and Sainsbury's around £500mln, providing extra means on top of the record sales to allow them to afford a big bonus for their shop floor staff. 

“It is good PR but more importantly it’s good labour relations,” said Russ Mould at AJ Bell, “those who are on the frontline are being recognised for what they are doing to helping to ensure that there is a sound business for everyone to come back to, when everything hopefully returns to normal, no matter how slowly that occurs. 

He said the other big grocery firms who have not yet announced such measures will surely think about their policies on this too.

M&S's move should be applauded, agreed analyst Richard Hunter at Interactive Investor.

“Whether it starts to snowball will depend of the profitability of the business in question. The supermarkets are clearly having their day in the sun at the moment, so that is a possibility.

“Not convinced it would spread to Royal Mail, who have enough financial pressure to be getting on with and, given their history, an obvious one such as Amazon are unlikely to play ball.”

Quick facts: Marks and Spencer Group PLC

Price: 125.75 GBX

LSE:MKS
Market: LSE
Market Cap: £2.46 billion
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