High street retailers are facing a tough festive season amid rising taxes and rising costs
High street retailers are preparing for a tough Christmas trading period, as higher taxes and rising costs raise concerns about the viability of many businesses in towns and cities.
The latest report from consultancy BDO revealed that retail sales in October grew by just 1.7% compared to the previous year, highlighting the difficulties facing retailers even before last week’s budget, which included a £25 billion tax increase for employers.
Aggregate retail sales, including online, rose 4.1% year-on-year, but sectors such as fashion and home goods underperformed. BDO’s head of retail and wholesale, Sophie Michael, expressed concern over the weak start to the holiday season, noting that sales are “still not back to 2022 levels.” Michael warned that if sales continue at this rate, the industry could face “a very difficult holiday season.”
The Chancellor’s Budget added to these concerns with a 1.2 per cent increase in employers’ National Insurance to 15%, from April, along with a reduction in the contribution limit. Retailers also face a 6.7% minimum wage increase next April, which could increase labor costs by 10% for some businesses.
BDO warns that these increased costs will hamper investment in high streets, where retailers may be forced to halt expansion or renovation plans. With the festive period being crucial for the sector, the added costs and economic pressure could see many shops rethink their high street presence, increasing the challenges in towns and cities across the UK.
