Zarah ChoudharyMore than half of CFOs in the retail sector plan to reduce workforce hours, overtime, and headcount in response to increased employer National Insurance Contributions (NICs) and other rising costs, according to a survey conducted by the British Retail Consortium (BRC).
Nearly a third anticipated increased automation, signalling significant workforce and HR challenges in the coming year.
The survey revealed widespread concern among CFOs about trading conditions for 2025, with sentiment falling to -57.
The majority (70%) of respondents described themselves as ‘pessimistic’ or ‘very pessimistic’ about trading conditions over the next 12 months, while only 13% expressed optimism.
Key concerns, identified by over 60% of respondents as being among their top three, included falling demand for goods and services, inflation, and the increasing tax and regulatory burden.
Two-thirds of respondents stated they would raise prices in response to increased NICs, while 46% plan to cut store headcount, and 52% expect to reduce head office staff.
Almost one-third (31%) said the increased costs would drive further automation within their businesses.
Nearly half (46%) of CFOs said they would reduce capital expenditure, while 25% expect to delay new store openings.
Additionally, 44% forecast reduced profits, further limiting capacity for future investment.
This survey followed a letter signed by 81 retail CEOs addressed to the Chancellor, which highlighted concerns over the economic consequences of the Budget.
The letter outlined how the retail sector’s costs could rise by over £7bn in 2025 due to increases in NICs (£2.33bn), National Living Wage requirements (£2.73bn), and the reformed packaging levy (£2bn).
Helen Dickinson, chief executive at the British Retail Consortium, said: “With the Budget adding over £7bn to their bills in 2025, retailers are now facing difficult decisions about future investment, employment, and pricing.
“As the largest private sector employer, employing many part-time and seasonal workers, the changes to the NI threshold have a disproportionate effect on both retailers and their supply chains, who together employ 5.7 million people across the country.
“Retailers have worked hard to shield their customers from higher costs, but with slow market growth and margins already stretched thin, it is inevitable that consumers will bear some of the burden.
“The majority of retailers have little choice but to raise prices in response to these increased costs, and food inflation is expected to rise steadily over the year.
“Local communities may find themselves with sparser high streets and fewer retail jobs available.
“Government can still take steps to shore up retail investment and confidence.
“Business rates remain the biggest roadblock to new shops and jobs, with retailers paying over a fifth of the total rates bill.
“The Government must confirm the planned reforms will make a meaningful difference to retailers’ bills and that no shop will end up paying more.”
