Massive job cuts and store closures expected in UK retail as economic pressures mount

Over 200,000 retail jobs and more than 17,000 stores are predicted to vanish next year as the sector's decade-long crisis persists, warns a leading retail body. The Centre for Retail Research (CRR) attributes this ongoing issue to online shopping, lingering effects of Covid-19, and high taxes, exacerbating a problem that originated with the financial crisis in 2008.

With many consumers out of the habit of high street shopping, shops have been grappling with a dearth of in-store customers. Even by early 2023, customer footfall was 10 per cent lower than in 2019, and even less in major cities, as reported by City AM.

Brits have instead opted for experiences such as dining out, city breaks, gym memberships and TV channel subscriptions, leaving less disposable income for shopping. Approximately 85,000 shops have shut down in the past six years, according to the CRR.

The British Retail Consortium (BRC) anticipates retail costs to surge by £7bn across the industry next year due to a combination of the minimum wage increase, the packaging levy and higher national insurance costs. "Businesses now face tough decisions: do they absorb the costs, pass them on through higher prices, or find other ways to cut back? ," posed retail economist Tim Black.

"In retail and hospitality, the challenge is especially tough... there’s no real room to absorb higher costs," Black added.

However, Benjamin Wiles, managing director of restructuring at Kroll, has stated that the outlook for next year remains "still uncertain". He suggests that increased costs for firms could be partly offset by stronger consumer finances as wages continue to rise.

On the other hand, retail experts argue that if retailers are forced to increase their prices due to higher costs, the benefits of wage increases will be nullified. Business rates are also set to rise next year.

Although Labour has pledged to overhaul the entire system in 2026, there are fears that this may be too late for many businesses. Alex Baldock, CEO of electrical retailer Currys, commented: "The rates relief proposed so far isn’t just too little, too late, but will actually leave many retailers worse off."

He added that as much as one-quarter of the entire business rates total now comes from the retail sector.

The CRR noted: "Rents paid by shops have been declining as stores close and new occupants become difficult to find [but] the decline in rents has not led to a fall in business rates," It further stated: "Online retailers of course pay business rates at the reduced levels applicable to warehouses... a satisfactory future for high streets will only occur if online retailers pay the same rates as store-based retailers."