High street retailers are bracing for a tough Christmas trading period, as rising taxes and rising costs raise concerns about the viability of many businesses in town and city centres.
A recent report from consultancy BDO revealed that in-store 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 rise on employers. .
Combined retail sales, including online, rose 4.1% year-on-year, but sectors such as fashion and homewares underperformed. Sophie Michael, head of retail and wholesale at BDO, expressed concern about the weak start to the festive season, noting that sales volumes are “not returning to 2022 levels”. Michael warned that if sales continued at this pace, the industry could face a “very difficult festive period”.
The Chancellor’s Budget heightened these concerns with a 1.2 percentage point rise in employers’ National Insurance to 15%, from April, along with a lower contributions threshold. Retailers also face a 6.7% rise in the minimum wage next April, which could see staffing costs rise by up to 10% for some businesses.
BDO warns that these increased expenses are likely to hamper investment in the high street, with retailers potentially having to halt expansion or refurbishment plans. With the festive period being crucial for the sector, additional costs and economic pressure may prompt more stores to reconsider their high street presence, exacerbating challenges in town and city centers across the UK.