Two thirds of British retailers will raise prices this year in response to higher employer social security costs introduced in the new Labour government’s first budget, a survey of finance chiefs showed on Wednesday.
Trade body the British Retail Consortium (BRC) said its survey of chief financial officers and finance directors at 52 major retailers also found that around half plan to reduce staff hours and headcount at their head offices and stores. Almost one third said the increased costs would lead to further automation. Over two thirds of respondents were “pessimistic” or “very pessimistic” about trading conditions over the coming 12 months.
As the UK economy struggles to grow, the government’s solution is a hike in employer taxes to raise money for investment in infrastructure and public services, which has prompted criticism from the business community.
Retailers have said the increased National Insurance payments, a rise in the national minimum wage, packaging levies and higher business rates – all coming in April – would cost the sector an additional 7 billion pounds ($8.5 billion) a year.
“The majority of retailers have little choice but to raise prices in response to these increased costs,” BRC Chief Executive Helen Dickinson said, reiterating the industry’s plea for reforms to business rates to make a meaningful difference to retailers’ tax bills.
The BRC survey, which chimed with another from the British Chambers of Commerce published on Monday, found the finance chiefs expect shop price inflation, as measured by the BRC, to hit an average of 2.2% in the second half of 2025. Food inflation was forecast to hit an average of 4.2% in the second half.
Official UK inflation data for December will be published later on Wednesday. It hit an eight-month high of 2.6% in November.
Last week, retailers including Next, Tesco, Sainsbury’s and M&S reported robust Christmas trading but flagged concerns about rising costs, the strength of the economy and the consumer in 2025.
German retail sales rose in 2024, but growth should be more modest this year due to the high level of uncertainty, according to retail association HDE.
Last year, retail sales rose 1.1% compared to the previous year in inflation-adjusted terms, official data showed on Friday. The HDE forecasts 0.5% growth in real terms this year.
“Consumption and the retail sector in Germany will not really gain momentum in 2025 either,” said HDE managing director Stefan Genth. “There is simply too much uncertainty,” he said. “Wars, high energy costs and overall economic stagnation are a toxic cocktail for consumption.”
In nominal terms, retail sales rose by 2.5% in 2024 and are expected to grow by 2.0% in 2025, according to HDE’s forecast.
The latest HDE survey with 700 retailers shows that 22% of respondents expect sales to increase this year, while almost half of them expect results to be below the previous year’s level.
In December, retail sales fell by 1.6% compared with the previous month, official data showed. Analysts had predicted a 0.2% increase.
Many big names in UK retail had a good Christmas season — despite the sector being generally sluggish — but it seems John Lewis Partnership (JLP) may not have been one of them.
The retailer — which operates its eponymous department stores and webstore, plus Waitrose supermarkets — has missed its profit target after a disappointing festive season.
It hasn’t shared any info officially but internal documents seen by The Telegraph suggest bad news to come when it does release its results.
Those internal documents have only been shared with staff so far with the company saying that sales have fallen short of expectations and it’s unlikely to achieve its hoped-for £131 million full-year profit.
The company is said to have blamed “lower consumer confidence and weaker than expected market confidence” for the sales miss in the month to 21 December, although also the fact that key trading days fell outside the period.
Sales targets were missed at both of the firm’s chains, although the newspaper said it still claimed it outperformed rivals and staff should be “proud of our performance”.
It will be interesting therefore to see exactly what its figures were as a number of rivals have actually reported a good Christmas. If its stores have beaten other supermarkets and chains like M&S, perhaps its targets were too ambitious in the first place.
We won’t know for a while, but we do know that with M&S resurgent, JLP’s supermarkets and department stores have lost some of their lustre as the destination of choice for Britain’s middle classes.
So what were the firm’s benchmarks? Back in September it had said it was seeing strong demand and expected a significant rise in profits for the year to January. The prior year’s pre-tax profit had been £56 million and the year before that it made a loss.
It had also talked about its turnaround efforts paying off and that it was seeing a “considerable improvement” in performance, with the John Lewis chain in particular expected to benefit from a buoyant second half.
Christian Dior Couture announced on Friday that Kim Jones, its Dior Homme artistic director, is leaving the post after seven years.
It’s been rumoured for some time that he would exit the label but it’s not yet known what his next step will be.
Jones has been widely praised for his work at Dior with his latest men’s collection shown this month being hailed as a success.
He’s been a key creative at LVMH having also designed its Fendi women’s collections. And he helmed Louis Vuitton’s menswear before he joined Dior.
The company said it “wishes to express its deepest gratitude” to the designer “who has accelerated the development of Men’s collections internationally and has greatly contributed to the worldwide influence of the House by creating an inspiring wardrobe that is both classic and contemporary, and connected to some artists of our time”.
And Delphine Arnault, who’s chairman and CEO of Christian Dior Couture,added: “I am extremely grateful for the remarkable work done by Kim Jones, his studio, and the ateliers. With all his talent and creativity, he has constantly reinterpreted the House’s heritage with genuine freedom of tone and surprising, highly desirable artistic collaborations.”
Jones meanwhile called it a “true honour to have been able to create my collections within the House of Dior, a symbol of absolute excellence. I express my deep gratitude to my studio and the ateliers who have accompanied me on this wonderful journey. They have brought my creations to life. I would also like to take this opportunity to thank the artists and friends I have met through my collaborations. Lastly, I feel sincere gratitude towards Bernard and Delphine Arnault, who have given me their full support.”