{"id":972036,"date":"2025-11-20T13:58:59","date_gmt":"2025-11-20T13:58:59","guid":{"rendered":"https:\/\/ukpostcode.org\/content\/?p=972036"},"modified":"2025-11-20T13:58:59","modified_gmt":"2025-11-20T13:58:59","slug":"despite-2-5-sales-uplift-uk-retailers-say-its-not-enough-to-cover-rising-costs","status":"publish","type":"post","link":"https:\/\/ukpostcode.org\/content\/despite-2-5-sales-uplift-uk-retailers-say-its-not-enough-to-cover-rising-costs\/","title":{"rendered":"Despite 2.5% Sales Uplift, UK Retailers Say It\u2019s Not Enough to Cover Rising Costs"},"content":{"rendered":"<p>.<\/p>\n<hr \/>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/ukpostcode.org\/content\/despite-2-5-sales-uplift-uk-retailers-say-its-not-enough-to-cover-rising-costs\/#Whats_the_Situation_25_Sales_Uplift_vs_Rising_Costs\" title=\"What\u2019s the Situation: 2.5% Sales Uplift vs Rising Costs\">What\u2019s the Situation: 2.5% Sales Uplift vs Rising Costs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/ukpostcode.org\/content\/despite-2-5-sales-uplift-uk-retailers-say-its-not-enough-to-cover-rising-costs\/#Key_Commentary_Broader_Implications\" title=\"Key Commentary &amp; Broader Implications\">Key Commentary &amp; Broader Implications<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/ukpostcode.org\/content\/despite-2-5-sales-uplift-uk-retailers-say-its-not-enough-to-cover-rising-costs\/#Bottom_Line\" title=\"Bottom Line\">Bottom Line<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/ukpostcode.org\/content\/despite-2-5-sales-uplift-uk-retailers-say-its-not-enough-to-cover-rising-costs\/#Key_Case_Studies_%E2%80%94_Retailers_Feeling_the_Squeeze\" title=\"Key Case Studies \u2014 Retailers Feeling the Squeeze\">Key Case Studies \u2014 Retailers Feeling the Squeeze<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/ukpostcode.org\/content\/despite-2-5-sales-uplift-uk-retailers-say-its-not-enough-to-cover-rising-costs\/#Broader_Industry_Commentary_Observations\" title=\"Broader Industry Commentary &amp; Observations\">Broader Industry Commentary &amp; Observations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/ukpostcode.org\/content\/despite-2-5-sales-uplift-uk-retailers-say-its-not-enough-to-cover-rising-costs\/#Interpretation_Implications\" title=\"Interpretation &amp; Implications\">Interpretation &amp; Implications<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Whats_the_Situation_25_Sales_Uplift_vs_Rising_Costs\"><\/span>What\u2019s the Situation: 2.5% Sales Uplift vs Rising Costs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ol>\n<li><strong>Sales Growth Isn\u2019t Enough<\/strong>\n<ul>\n<li>According to <em>BRC-KPMG<\/em> data, UK retail sales rose <strong>2.5% year-on-year<\/strong> in July. (<a title=\"Sunny start to July lifts retail sales +2.5% YoY, but Autumn Budget uncertainty looms, BRC\u2013KPMG \u2013 Retail Rewired\" href=\"https:\/\/retailrewired.co.uk\/2025\/08\/12\/sunny-start-to-july-lifts-retail-sales-2-5-yoy-but-autumn-budget-uncertainty-looms-brc-kpmg-retail-sales-monitor\/?utm_source=chatgpt.com\">Retail Rewired<\/a>)<\/li>\n<li>However, retail leaders warn that this growth is \u201c<em>barely touching the sides<\/em>\u201d of the <strong>\u00a37 billion<\/strong> in additional costs imposed on them by recent government policy. (<a title=\"Retail sales boost of 2.5% \u2018barely touching the sides\u2019 of costs, sector warns | The Standard\" href=\"https:\/\/www.standard.co.uk\/business\/business-news\/british-retail-consortium-barclays-kpmg-met-office-b1242489.html?utm_source=chatgpt.com\">The Standard<\/a>)<\/li>\n<li>Helen Dickinson, CEO of the British Retail Consortium (BRC), has said that unless costs are mitigated, retailers will face hard choices around investment, jobs, and even store closures. (<a title=\"Retail sales boost of 2.5% \u2018barely touching the sides\u2019 of costs, sector warns | The Standard\" href=\"https:\/\/www.standard.co.uk\/business\/business-news\/british-retail-consortium-barclays-kpmg-met-office-b1242489.html?utm_source=chatgpt.com\">The Standard<\/a>)<\/li>\n<\/ul>\n<\/li>\n<li><strong>Where the Costs Are Coming From<\/strong><br \/>\nRetailers are pointing to several key cost pressures:<\/p>\n<ul>\n<li><strong>Employer National Insurance Contributions (NICs)<\/strong>: This was raised, adding significantly to labor costs. (<a title=\"Retailers warn of higher prices in 2025 and urge ministers to ease tax burden | Retail industry | The Guardian\" href=\"https:\/\/www.theguardian.com\/business\/2025\/jan\/09\/retailers-warn-of-higher-prices-in-2025-and-urge-ministers-to-ease-tax-burden?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li><strong>National Living Wage<\/strong>: A higher minimum wage is increasing wage bills for many retailers. (<a title=\"Retailers warn of higher prices in 2025 and urge ministers to ease tax burden | Retail industry | The Guardian\" href=\"https:\/\/www.theguardian.com\/business\/2025\/jan\/09\/retailers-warn-of-higher-prices-in-2025-and-urge-ministers-to-ease-tax-burden?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li><strong>Packaging Levies<\/strong>: New or reformed packaging taxes (environmental levies) are increasing operational costs. (<a title=\"Retailers warn of higher prices in 2025 and urge ministers to ease tax burden | Retail industry | The Guardian\" href=\"https:\/\/www.theguardian.com\/business\/2025\/jan\/09\/retailers-warn-of-higher-prices-in-2025-and-urge-ministers-to-ease-tax-burden?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li><strong>Operating Cost Inflation<\/strong>: According to Retail Economics (via Retail Rewired), operating costs overall are rising by an average of <strong>3.9% year-on-year<\/strong>, which they say is equivalent to the cost of nearly 195,000 full-time retail jobs. (<a title=\"UK retailers hit by \u00a35.6billion of additional costs as Budget bites \u2013 Retail Rewired\" href=\"https:\/\/retailrewired.co.uk\/2025\/04\/07\/uk-retailers-hit-by-5-6billion-of-additional-costs-as-budget-bites\/?utm_source=chatgpt.com\">Retail Rewired<\/a>)<\/li>\n<li><strong>Energy, Supply Chain, and Labour Pressures<\/strong>: Some of the cost pressures also come from higher upstream costs (e.g. for suppliers), which are being passed down the chain. (<a title=\"UK Commercial \u2013 Q2 2025\" href=\"https:\/\/pdf.euro.savills.co.uk\/uk\/commercial-retail-uk\/sc-and-hs-q2-2025.pdf?utm_source=chatgpt.com\">Savills PDF<\/a>)<\/li>\n<\/ul>\n<\/li>\n<li><strong>Retailers\u2019 Pricing Strategy<\/strong>\n<ul>\n<li>Despite these pressures, many retailers are limiting how much of the cost they pass onto consumers. Retail Gazette reports that in March some retailers held back on price rises, despite the cost headwinds. (<a title=\"Retailers limit price rises in March despite cost pressures - Retail Gazette\" href=\"https:\/\/www.retailgazette.co.uk\/blog\/2025\/04\/retailers-price-rises-march\/?utm_source=chatgpt.com\">Retail Gazette<\/a>)<\/li>\n<li>But at the same time, a large share of retailers (per BRC data) are planning <strong>to raise prices<\/strong>: ~67% of finance heads in a survey said they would need to hike prices to cope with national insurance and wage cost pressures. (<a title=\"Two thirds of retailers to hike prices, industry warns | The Independent\" href=\"https:\/\/www.independent.co.uk\/news\/business\/retail-price-rises-national-insurance-budget-reeves-b2679363.html?utm_source=chatgpt.com\">The Independent<\/a>)<\/li>\n<li>The BRC also warns that more tax burdens (e.g., in the upcoming Autumn Budget) could force further price increases. (<a title=\"Sunny start to July lifts retail sales +2.5% YoY, but Autumn Budget uncertainty looms, BRC\u2013KPMG \u2013 Retail Rewired\" href=\"https:\/\/retailrewired.co.uk\/2025\/08\/12\/sunny-start-to-july-lifts-retail-sales-2-5-yoy-but-autumn-budget-uncertainty-looms-brc-kpmg-retail-sales-monitor\/?utm_source=chatgpt.com\">Retail Rewired<\/a>)<\/li>\n<\/ul>\n<\/li>\n<li><strong>Inflation Risks for Consumers<\/strong>\n<ul>\n<li>According to the BRC, food price inflation is expected to accelerate: in their modeling, retailers expect food prices to rise by <strong>~4.2%<\/strong> in the second half of the year. (<a title=\"Retailers warn of higher prices in 2025 and urge ministers to ease tax burden | Retail industry | The Guardian\" href=\"https:\/\/www.theguardian.com\/business\/2025\/jan\/09\/retailers-warn-of-higher-prices-in-2025-and-urge-ministers-to-ease-tax-burden?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li>Non-food prices are also under upward pressure, given squeezed margins and rising business costs. (<a title=\"Two thirds of retailers to hike prices, industry warns | The Independent\" href=\"https:\/\/www.independent.co.uk\/news\/business\/retail-price-rises-national-insurance-budget-reeves-b2679363.html?utm_source=chatgpt.com\">The Independent<\/a>)<\/li>\n<li>Helen Dickinson (BRC) has warned that if retailers are forced to pass on even more costs, it may hit households \u2014 especially those on lower incomes \u2014 and could reduce consumer spending. (<a title=\"Retail sales boost of 2.5% \u2018barely touching the sides\u2019 of costs, sector warns | The Standard\" href=\"https:\/\/www.standard.co.uk\/business\/business-news\/british-retail-consortium-barclays-kpmg-met-office-b1242489.html?utm_source=chatgpt.com\">The Standard<\/a>)<\/li>\n<\/ul>\n<\/li>\n<li><strong>Operational Risks<\/strong>\n<ul>\n<li>According to a <em>Retail Systems<\/em> survey, around a third of retailers plan to accelerate automation to manage labor cost pressures. (<a title=\"Retailers warn of price rises as National Insurance costs bite - Retail Systems\" href=\"https:\/\/www.retail-systems.com\/rs\/Retailers_Warn_Of_Price_Rises_As_National_Insurance_Costs_Bite.php?utm_source=chatgpt.com\">retail-systems.com<\/a>)<\/li>\n<li>Some retailers are already planning to cut capital expenditure, delay new store openings, or scale back investments to manage tighter margins. (<a title=\"UK retailers hit by \u00a35.6billion of additional costs as Budget bites \u2013 Retail Rewired\" href=\"https:\/\/retailrewired.co.uk\/2025\/04\/07\/uk-retailers-hit-by-5-6billion-of-additional-costs-as-budget-bites\/?utm_source=chatgpt.com\">Retail Rewired<\/a>)<\/li>\n<li>The risk of job losses is real: as costs rise, some retailers may reduce store staff or restructure.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"Key_Commentary_Broader_Implications\"><\/span>Key Commentary &amp; Broader Implications<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><strong>From the BRC<\/strong>: The trade body is being very vocal \u2014 they\u2019re calling on government to <strong>rethink the tax burden<\/strong> they\u2019re placing on retailers (especially via NICs and packaging levies). (<a title=\"Retailers warn of higher prices in 2025 and urge ministers to ease tax burden | Retail industry | The Guardian\" href=\"https:\/\/www.theguardian.com\/business\/2025\/jan\/09\/retailers-warn-of-higher-prices-in-2025-and-urge-ministers-to-ease-tax-burden?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li><strong>KPMG\u2019s View<\/strong>: Linda Ellett, head of consumer, retail &amp; leisure markets at KPMG, notes that although warm weather and sporting events pushed up retail sales in July, the growth is largely being driven by <strong>higher prices<\/strong>, not stronger consumer demand. (<a title=\"Sunny start to July lifts retail sales +2.5% YoY, but Autumn Budget uncertainty looms, BRC\u2013KPMG \u2013 Retail Rewired\" href=\"https:\/\/retailrewired.co.uk\/2025\/08\/12\/sunny-start-to-july-lifts-retail-sales-2-5-yoy-but-autumn-budget-uncertainty-looms-brc-kpmg-retail-sales-monitor\/?utm_source=chatgpt.com\">Retail Rewired<\/a>)<\/li>\n<li><strong>Retail Economics<\/strong>: CEO Richard Lim warns that the scale of cost increases could reshape the retail landscape \u2014 with more closures, reduced investment, and a push for more automation. (<a title=\"UK retailers hit by \u00a35.6billion of additional costs as Budget bites \u2013 Retail Rewired\" href=\"https:\/\/retailrewired.co.uk\/2025\/04\/07\/uk-retailers-hit-by-5-6billion-of-additional-costs-as-budget-bites\/?utm_source=chatgpt.com\">Retail Rewired<\/a>)<\/li>\n<li><strong>Broader Economic Risk<\/strong>: If retailers pass costs on, that could increase inflation further, which would feed through to consumers already under pressure \u2014 potentially hurting consumer spending and economic growth.<\/li>\n<\/ul>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"Bottom_Line\"><\/span>Bottom Line<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>A <strong>2.5% rise in sales<\/strong> sounds good on the surface, but for UK retailers, it isn\u2019t nearly enough to offset the <strong>\u00a37 billion+<\/strong> of new cost pressures they face.<\/li>\n<li>Much of their cost burden comes from policy-driven things (higher employer NICs, living wage, packaging tax) rather than just macro shocks.<\/li>\n<li>Retailers are caught in a tight spot: if they raise prices, they risk losing customers; if they don\u2019t, their margins erode, which could lead to job cuts and reduced investment.<\/li>\n<li>There\u2019s a strong call from the industry for <strong>government intervention<\/strong>, particularly on reducing tax burdens or reforming the structure of business rates and levies, to prevent long-term damage to the retail sector.<\/li>\n<li>Good point. Here are <strong>case studies<\/strong> and key <strong>comments<\/strong> from UK retailers that help explain why, even with a sales uplift, they say it\u2019s not enough to absorb their rising costs. (Note: I didn\u2019t find a credible\/public source that <em>exactly<\/em> cites a \u201c2.5% sales uplift\u201d in the same context as the cost claims \u2014 but I\u2019ll work with the broadly reported cost pressures and retailer reactions.)<br \/>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"Key_Case_Studies_%E2%80%94_Retailers_Feeling_the_Squeeze\"><\/span>Key Case Studies \u2014 Retailers Feeling the Squeeze<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ol>\n<li><strong>Next<\/strong>\n<ul>\n<li><strong>Cost Impact<\/strong>: Next expects a <strong>\u00a367 million<\/strong> increase in its wage bill due to higher employer NICs and a higher national living wage. (<a title=\"Next warns over price hikes and slowing growth after Budget measures | The Standard\" href=\"https:\/\/www.standard.co.uk\/business\/business-news\/next-warns-over-price-hikes-and-slowing-growth-after-budget-measures-b1203291.html?utm_source=chatgpt.com\">The Standard<\/a>)<\/li>\n<li><strong>Pricing Response<\/strong>: It plans an <em>\u201cunwelcome\u201d<\/em> <strong>1% price increase<\/strong> on like-for-like goods to offset around <strong>\u00a313 million<\/strong> of that cost. (<a title=\"Next warns over price hikes and slowing growth after Budget measures | The Standard\" href=\"https:\/\/www.standard.co.uk\/business\/business-news\/next-warns-over-price-hikes-and-slowing-growth-after-budget-measures-b1203291.html?utm_source=chatgpt.com\">The Standard<\/a>)<\/li>\n<li><strong>Efficiency Measures<\/strong>: To mitigate further, Next is trialling self-service tills. (<a title=\"Exclusive: Next to trial self-service tills amid \u00a367m wage bill increase - Retail Gazette\" href=\"https:\/\/www.retailgazette.co.uk\/blog\/2025\/01\/next-to-trial-self-service\/?utm_source=chatgpt.com\">Retail Gazette<\/a>)<\/li>\n<li><strong>Outlook \/ Growth<\/strong>: The company warns that sales growth may slow in 2025 as these tax and wage pressures feed through. (<a title=\"Next warns over price hikes and slowing growth after Budget measures | The Standard\" href=\"https:\/\/www.standard.co.uk\/business\/business-news\/next-warns-over-price-hikes-and-slowing-growth-after-budget-measures-b1203291.html?utm_source=chatgpt.com\">The Standard<\/a>)<\/li>\n<li><strong>Wage Cost Breakdown<\/strong>: According to its trading statement, part of the \u00a373 m full-year impact comes from the ENI (Employer NIC) threshold reduction, disproportionately affecting part-time workers. (<a title=\"Trading Statement \u2013 7 January 2025\" href=\"https:\/\/www.rns-pdf.londonstockexchange.com\/rns\/3127S_1-2025-1-6.pdf?utm_source=chatgpt.com\">London Stock Exchange PDF<\/a>)<\/li>\n<\/ul>\n<\/li>\n<li><strong>Marks &amp; Spencer (M&amp;S)<\/strong>\n<ul>\n<li><strong>Budget Cost Hit<\/strong>: M&amp;S expects a <strong>\u00a3120 million<\/strong> hit from the government\u2019s budget measures. (<a title=\"M&amp;S reveals \u00a3120m hit from Budget measures | The Independent\" href=\"https:\/\/www.independent.co.uk\/news\/business\/m-s-reveals-ps120m-hit-from-budget-measures-b2642373.html?utm_source=chatgpt.com\">The Independent<\/a>)<\/li>\n<li><strong>National Insurance Impact<\/strong>: CEO Stuart Machin says ~\u00a360 million of that comes from increased employer NICs; another ~\u00a360 million from higher wage costs (minimum wage increases). (<a title=\"M&amp;S profits rise but retailer warns of \u00a360m hit from Reeves\u2019s budget | Marks &amp; Spencer | The Guardian\" href=\"https:\/\/www.theguardian.com\/business\/2024\/nov\/06\/m-and-s-profits-jump-but-reeves-budget-could-cost-it-120m-in-2025?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li><strong>Strategy<\/strong>: While M&amp;S wants to absorb the hit (\u201cdo everything we can \u2026 to avoid passing it on\u201d), Machin nonetheless acknowledges the challenge. (<a title=\"M&amp;S reveals \u00a3120m hit from Budget measures | The Independent\" href=\"https:\/\/www.independent.co.uk\/news\/business\/m-s-reveals-ps120m-hit-from-budget-measures-b2642373.html?utm_source=chatgpt.com\">The Independent<\/a>)<\/li>\n<li><strong>Operational Adjustments<\/strong>: The company is looking into improving the efficiency of its stores, its distribution, and its supply chain. (<a title=\"M&amp;S reports strong festive sales but says tax rises will lead to cost cuts | Marks &amp; Spencer | The Guardian\" href=\"https:\/\/www.theguardian.com\/business\/2025\/jan\/09\/m-and-s-reports-strong-festive-sales-but-says-uk-firms-will-take-hit-from-tax-rises?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li><strong>Risks to Jobs<\/strong>: M&amp;S suggests they don\u2019t foresee big job cuts, but they\u2019re more cautious with hiring given the cost environment. (<a title=\"M&amp;S reports strong festive sales but says tax rises will lead to cost cuts | Marks &amp; Spencer | The Guardian\" href=\"https:\/\/www.theguardian.com\/business\/2025\/jan\/09\/m-and-s-reports-strong-festive-sales-but-says-uk-firms-will-take-hit-from-tax-rises?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<\/ul>\n<\/li>\n<li><strong>Tesco<\/strong>\n<ul>\n<li><strong>NIC &amp; Packaging Costs<\/strong>: Tesco is pushing a big cost-cutting drive, citing an <strong>extra \u00a3235 million<\/strong> in NICs. (<a title=\"Tesco to cut further \u00a3500m in costs to help offset Reeves\u2019s tax rises | Tesco | The Guardian\" href=\"https:\/\/www.theguardian.com\/business\/2025\/apr\/10\/tesco-plans-to-cut-further-500m-in-costs-to-help-offset-rachel-reeves-tax-rises?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li><strong>Efficiency Drive<\/strong>: To mitigate, they plan to cut <strong>\u00a3500 million<\/strong> from costs more broadly. (<a title=\"Tesco to cut further \u00a3500m in costs to help offset Reeves\u2019s tax rises | Tesco | The Guardian\" href=\"https:\/\/www.theguardian.com\/business\/2025\/apr\/10\/tesco-plans-to-cut-further-500m-in-costs-to-help-offset-rachel-reeves-tax-rises?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li><strong>Public Comment<\/strong>: Tesco\u2019s CEO, Ken Murphy, has publicly warned that the rising tax burden is becoming unsustainable: \u201cenough\u2019s enough.\u201d (<a title=\"Tesco chief warns Reeves 'enough's enough' on business taxes\" href=\"https:\/\/www.ft.com\/content\/52524b83-e660-4a0f-8007-b22f6017a022?utm_source=chatgpt.com\">Financial Times<\/a>)<\/li>\n<li><strong>Employment Stance<\/strong>: Murphy says they\u2019re not ruling out job cuts, but they\u2019re also using cost savings to support growth. (<a title=\"Tesco to cut further \u00a3500m in costs to help offset Reeves\u2019s tax rises | Tesco | The Guardian\" href=\"https:\/\/www.theguardian.com\/business\/2025\/apr\/10\/tesco-plans-to-cut-further-500m-in-costs-to-help-offset-rachel-reeves-tax-rises?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"Broader_Industry_Commentary_Observations\"><\/span>Broader Industry Commentary &amp; Observations<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><strong>BRC &amp; CFO Survey Findings<\/strong>\n<ul>\n<li>According to a BRC survey of 52 retail CFOs: <strong>67%<\/strong> plan to raise prices because of the employer NIC increase. (<a title=\"Two thirds of leading retailers warn Budget will force them to hike prices | The Standard\" href=\"https:\/\/www.standard.co.uk\/business\/business-news\/two-thirds-of-leading-retailers-warn-budget-will-force-them-to-hike-prices-b1204865.html?utm_source=chatgpt.com\">The Standard<\/a>)<\/li>\n<li>Large concern: <strong>88%<\/strong> of these CFOs list \u201ctax and regulatory burden\u201d (NIC, business rates, packaging levy, etc.) among their top 3 business risks. (<a title=\"Retailers warn of rising prices and job losses if Chancellor hikes taxes\" href=\"https:\/\/brc.org.uk\/news-and-events\/news\/corporate-affairs\/2025\/ungated\/retailers-warn-of-rising-prices-and-job-losses-if-chancellor-hikes-taxes\/?utm_source=chatgpt.com\">BRC<\/a>)<\/li>\n<li>As a result, many are reducing hours, cutting headcount (both at stores and HQ), or accelerating automation. (<a title=\"Retailers express \u2018significant concern\u2019 around future trading conditions\" href=\"https:\/\/www.foodmanufacture.co.uk\/Article\/2025\/01\/16\/retailers-express-significant-concern-around-future-trading-conditions\/?utm_source=chatgpt.com\">FoodManufacture.co.uk<\/a>)<\/li>\n<li>The BRC warns that the \u201cdouble whammy\u201d \u2014 NIC + living wage + packaging levy \u2014 could reduce margins, increase prices, and risk job losses. (<a title=\"Retailers warn of higher prices in 2025 and urge ministers to ease tax burden | Retail industry | The Guardian\" href=\"https:\/\/www.theguardian.com\/business\/2025\/jan\/09\/retailers-warn-of-higher-prices-in-2025-and-urge-ministers-to-ease-tax-burden?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<\/ul>\n<\/li>\n<li><strong>Cost Pressure Estimates<\/strong>\n<ul>\n<li>The BRC estimates that the aggregate cost hit from the budget measures could be <strong>\u00a37 billion<\/strong> for UK retailers. (<a title=\"UK retailers warn Reeves of \u00a37bn hit from budget tax rises\" href=\"https:\/\/www.theguardian.com\/business\/2024\/nov\/19\/uk-retailers-rachel-reeves-budget-tax-rises-brc?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li>Retail Economics (via Retail Rewired) estimates ~\u00a35.56 bn additional costs for 2025\/26, driven by rising operating costs (wages, NIC, etc.). (<a title=\"UK retailers hit by \u00a35.6billion of additional costs as Budget bites \u2013 Retail Rewired\" href=\"https:\/\/retailrewired.co.uk\/2025\/04\/07\/uk-retailers-hit-by-5-6billion-of-additional-costs-as-budget-bites\/?utm_source=chatgpt.com\">Retail Rewired<\/a>)<\/li>\n<li>Given very tight retail margins (often 2-4%), these cost increases are particularly challenging. (<a title=\"Labour costs will harm employment\" href=\"https:\/\/brc.org.uk\/news-and-events\/news\/corporate-affairs\/2025\/ungated\/labour-costs-will-harm-employment\/?utm_source=chatgpt.com\">BRC<\/a>)<\/li>\n<\/ul>\n<\/li>\n<li><strong>Tax \/ Regulatory Pressure<\/strong>\n<ul>\n<li>Retailers are calling on the government to <em>mitigate<\/em> this burden \u2014 e.g., by reforming business rates so stores don\u2019t pay more than before. (<a title=\"Retailers warn of higher prices in 2025 and urge ministers to ease tax burden | Retail industry | The Guardian\" href=\"https:\/\/www.theguardian.com\/business\/2025\/jan\/09\/retailers-warn-of-higher-prices-in-2025-and-urge-ministers-to-ease-tax-burden?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li>The BRC argues that without such changes, the increased costs could feed into <em>higher consumer prices, reduced jobs,<\/em> and <em>store closures<\/em>. (<a title=\"UK retailers warn Reeves of \u00a37bn hit from budget tax rises\" href=\"https:\/\/www.theguardian.com\/business\/2024\/nov\/19\/uk-retailers-rachel-reeves-budget-tax-rises-brc?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"Interpretation_Implications\"><\/span>Interpretation &amp; Implications<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>Even if <strong>sales are improving<\/strong> (or at least stable), <strong>rising structural costs<\/strong> (taxes, wages, regulation) are significantly narrowing margins.<\/li>\n<li>Retailers are <strong>partially passing costs on<\/strong>, but not fully \u2014 likely because of competitive pressures and consumer sensitivity.<\/li>\n<li>There\u2019s a risk of <strong>job losses<\/strong>, particularly in entry-level or part-time roles, because the NIC threshold change disproportionately affects those roles.<\/li>\n<li>Longer-term, retailers may have to rely more on technology (automation, self-service), cost efficiencies, or scale to absorb these pressures.<\/li>\n<li>If the government doesn\u2019t respond (or relieves some burdens), smaller retailers may be hit hardest, and retail industry dynamics (store closures, investment pullbacks) could accelerate.<\/li>\n<\/ul>\n<hr \/>\n<p>&nbsp;<\/p>\n<ul>\n<li><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>. What\u2019s the Situation: 2.5% Sales Uplift vs Rising Costs Sales Growth Isn\u2019t Enough According to BRC-KPMG data, UK retail sales rose 2.5% year-on-year in&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10,6],"tags":[],"class_list":["post-972036","post","type-post","status-publish","format-standard","hentry","category-gb-news","category-uk-news"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Despite 2.5% Sales Uplift, UK Retailers Say It\u2019s Not Enough to Cover Rising Costs - UK News &amp; Updates<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ukpostcode.org\/content\/despite-2-5-sales-uplift-uk-retailers-say-its-not-enough-to-cover-rising-costs\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Despite 2.5% Sales Uplift, UK Retailers Say It\u2019s Not Enough to Cover Rising Costs - UK News &amp; Updates\" \/>\n<meta property=\"og:description\" content=\". 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