A survey of CFOs (Chief Financial Officers) at 52 leading retailers by the British Retail Consortium (BRC), has revealed significant concern about trading conditions over the next 12 months.
Some 70% of respondents said they were pessimistic about trading conditions over the coming 12 months, while just 13% said they were optimistic.
The biggest concerns, all appearing in over 60% of CFO’s 'top three concerns for their business' were falling demand for goods and services, inflation for goods and services, and the increasing tax and regulatory burden.
Raise Prices
When asked how they would be responding to the increases in employers’ National Insurance Contributions (NICs), from April 2025, two-thirds stated they would raise prices (67%), while around half said they would be reducing ‘number of hours/overtime’ (56%), ‘head office headcount’ (52%), and ‘stores headcount’ (46%).
Almost one third said the increased costs would lead to further automation (31%).
The impact of the Budget on wider business investment was also clear said the BRC, with 46% of CFOs saying they would ‘reduce capital expenditure’ and 25% saying they would ‘delay new store openings.’
Around 44% of respondents expected reduced profits, which will further limit the capacity for investment.
Difficult Decisions
“With the Budget adding over £7 billion (€8.29) to their bills in 2025, retailers are now facing into the difficult decisions about future investment, employment and pricing," said Helen Dickinson, Chief Executive at the BRC.
"The majority of retailers have little choice but to raise prices in response to these increased costs, and food inflation is expected to rise steadily over the year."
The survey comes only a few weeks after 81 retail CEOs wrote to the chancellor with their concerns about the economic consequences of the Budget.
The letter noted that the retail industry’s costs could rise by over £7 billion (€8.29 billion) in 2025 as a result of changes to employers’ NICs , National Living Wage increases and the reformed packaging levy.
The Budget is not the only challenge retailers are facing, with weak consumer confidence and low consumer demand also an issue.
As part of the survey, CFOs offered their forecasts for the year ahead.
These suggest that shop price inflation, currently at 0.5%, will rise to an average of 2.2% in the second half of 2025.
This would be most pronounced for food, where inflation is expected to hit an average of 4.2% in the second half of the year.
