The National Living Wage (NLW) government policy target is to increase the NLW to £9 per hour by 2020. Explain two possible impacts of this policy on the UK supermarket industry.

Increased labour costs, many staff on minimum wage. This could impact on competitiveness against other supermarkets, as prices may have to be increased to match the increase in costs, so customers may switch. (e.g. Sainsbury's to Aldi)There may be very little impact on the supermarkets if wages are already set above £9 - supply and demand diagram showing a price floor.Also, other industries seeing rising costs may lead to increased revenues, due to higher disposable incomes.