SHOPPERS CAUTIOUS TO SPEND
On top of retailers’ woes, an ongoing cost of living crisis has seen many shoppers become more cautious about their spending habits.
With a pessimistic outlook about when the wider economy will improve, shuttered shopfronts have become a familiar sight across the United Kingdom.
The Centre For Retail Research said about 13,500 shops in the United Kingdom closed last year, marking a 28 per cent increase from the previous year.
Changes to national insurance contributions and an increased minimum wage were announced in the last government budget. Such changes have burdened the retail sector with an additional cost of US$8.5 billion, according to the British Retail Consortium.
“Retail operates on tight margins. It can’t simply absorb those costs, so that will lead to higher prices, some job losses, unfortunately – and shop closures,” said the trade association’s communications executive Guy Leman.
However, one silver lining is a government proposal to reform business rates, he noted.
These are levied on most non-domestic properties like shops, offices and pubs. The rates are based on how much it would cost to rent a property during a particular period.
The government has suggested a 40 per cent reduction in business rates for retail, hospitality, and leisure businesses until 2026, up to a maximum of 110,000 pounds (US$133,000) per business.
“This has been a system which has long burdened the industry (and) limited investment in stores and high streets. We need to ensure that that reform leaves no shop paying more. And ultimately, the whole industry is better off as a result of that reform,” added Leman.
BLEAK OUTLOOK FOR RETAIL SALES
After a disappointing 2024, hopes were pinned on the so-called Golden Quarter – the three months of the year that include Black Friday sales and the build up to Christmas.
However, latest figures showed the value of sales rose by less than half a per cent.
Industry players have warned that things will get worse in 2025.
