Story Highlight
– Rising labour costs heighten CFOs’ anxiety about retail.
– 69% of CFOs are pessimistic about future outlook.
– 74% believe budget will hinder investment opportunities.
– Retail employment costs increased by £5 billion in 2025.
– Over half of CFOs plan job role reductions.
Full Story
Concerns among finance leaders in the retail sector have escalated significantly, according to a recent British Retail Consortium (BRC) survey targeting chief financial officers (CFOs) and finance directors. This heightened anxiety particularly pertains to labour costs expected over the forthcoming year.
Worries surrounding labour expenditures and the implications of the Employment Rights Act, which came into force in January, have prompted a marked shift in sentiment. The survey found that 69% of those surveyed now characterise their outlook as ‘pessimistic’ or ‘very pessimistic’, a notable increase from 56% recorded in July last year. Conversely, only 14% expressed optimism, up marginally from 11% in the same period.
The survey reflects a broader unease regarding the upcoming 2025 Budget, with 74% of CFOs indicating that it would complicate investment efforts. Labour market issues are now the primary focus, with an overwhelming 84% placing labour and employment costs among their top three concerns—an increase from just 21% in July.
Additional risks impacting the retail landscape include a decline in consumer demand (77%), increased costs for inputs (39%), and a growing burden of taxes and regulations (29%).
These challenges are compounded by an already tough environment, particularly as retail employment costs surged by £5 billion in 2025 due to rising employer National Insurance Contributions and an elevated National Living Wage. The BRC reports a 10% rise in annual costs associated with hiring full-time entry-level employees, while part-time roles have seen an even greater increase of over 13%.
Youth unemployment figures are troubling, with the rate now at 15.9%, indicating approximately 730,000 individuals under the age of 24 are currently jobless.
In response to these financial pressures, many CFOs are anticipating significant changes in their workforce strategies. A majority, 61%, are considering reducing staff hours or overtime, and 45% plan to implement hiring freezes. Regarding overall workforce management, more than half (55%) intend to cut positions at head offices, and 42% foresee reductions in store staff.
To cope with a diminished workforce, retailers are increasingly focusing on enhancing productivity, with 68% seeking to drive efficiency and 61% investing in automation technologies.
BRC chief executive Helen Dickinson stated, “The economy is expected to remain fragile, with weak wage growth, unemployment rising, and low consumer confidence, all pointing towards falling demand. At the same time, businesses face sharply higher costs, from rising input prices and wage bills to new burdens created by government policy.”
Dickinson further noted the critical need for well-managed reform under the Employment Rights Act, which she described as the most significant reform of employment legislation in recent memory. “If managed effectively, these reforms can elevate standards while also supporting flexible and entry-level roles that are essential for those whose circumstances do not conform to a traditional 9-5 work schedule.”
However, she cautioned that neglecting business needs in policies related to guaranteed hours and union rights could lead to increased complications and decreased flexibility, ultimately jeopardising vital entry-level and part-time roles at a time when such opportunities are essential for the economy.
