Skip to content
Search
AI Powered
Latest Stories

'High street retail struggles to continue in 2025'

High street retail struggle

High street retail struggle

Getty Images

The year 2025 is set to be another difficult year for high street retail as rising costs continue to mount, shows the latest industry report, states that the UK is navigating a tough economic climate marked by sluggish growth, stubborn inflation, and weak consumer confidence, creating challenges for both businesses and households.

According to BDO’s latest High Street Sales tracker, total retail sales in discretionary spend categories grew by 7.1 per cent in January.


The growth however came off the back of a very weak set of results in January 2024 (-0.8 per cent) and was largely driven by growth in online sales, which jumped 15.5 per cent compared to the same period the previous year.

Meanwhile, sales in bricks and mortar stores grew by only 3.2 per cent, from a poor base of a 4.2 per cent decline, serving as a stark reminder that high street retail is struggling to recover from the trends experienced in 2024.

BDO noted that results indicate a large drop in volumes over the past two years.

Fashion and homewares retailers faced particularly challenging conditions in January, with sales in-store growing by 3.3 per cent and 3.4 per cent respectively against poor performances last year when sales fell 6.7 per cent and 10.1 per cent.

The report suggested that January’s poor weather may have contributed to mixed footfall on the high street and driven a better result for online sales, but this is also a continuation of the sector’s overall poor performance in 2024 and a disappointing final "Golden Quarter".

Consumer confidence has also taken a knock, dropping to -22 in January 2025, highlighting a general sense of pessimism about the economic outlook.

In summary, the UK is navigating a tough economic climate marked by sluggish growth, stubborn inflation, and weak consumer confidence, creating challenges for both businesses and households, states the report.

“These results may seem positive on the surface, but the underlying numbers show that the weak growth in the run-up to Christmas has continued into the new year,” said Sophie Michael, Head of Retail and Wholesale at BDO.

“While many retailers may have seen a rise in sales through the release of some of the pent-up consumer spending that didn’t come through before Christmas, January trading for discretionary spend requires heavy encouragement through discounting; this delayed spending will no doubt have a significant impact on already thin margins.

“The sector has been challenged for some time by the impact of significant cost increases, which will continue to mount throughout the year, particularly post the implementation of the changes in the budget this April.

"Raising the thresholds for National Insurance contributions will disproportionately affect retailers, who tend to have large workforces with lower average earnings. Add in increases to the National Living Wage, business rates and the Plastic Packaging Tax all coming together and at fast pace, their thin margins will be under even more pressure.

“Retailers need to find a way to balance the increased cost of doing business while investing in product development, customer service and underlying technology, like AI, that will maintain their competitiveness. They need clear visibility on how their costs will increase to identify effective actions to mitigate the impact.

"This includes clarity over how their supply chain costs will rise, with many of the businesses they rely on being subject to some of the same pressures as themselves.

"The sector already saw a high number of job losses in 2024 and retail store closures; with the oncoming cost increases, these numbers are unlikely to ease in 2025.”

More for you

​New Co-op report reveals in disparity in apprenticeship scheme by small business

New Co-op report reveals in disparity in apprentices

iStock image

Small businesses lag in offering apprenticeships

Small businesses are "18 times less likely" to offer an apprenticeship scheme as compared to large businesses, a recent report has claimed, adding that some small businesses are not taking proactive steps to recruit apprentices from lower socioeconomic backgrounds.

Co-op in a report released on Monday (10) points out how more than a third (38 per cent) of school leavers face a lack of apprenticeship opportunities in their local area.

Keep ReadingShow less
Retail sales in January 2025

Retail sales in January 2025

iStock image

Retail sales surge in January despite stormy weather

January sales kicked off a solid month for retail with stores delivering their strongest growth in almost two years, shows industry report released today (11).

According to retail body British Retail Consortium (BRC), UK total retail sales increased by 2.6 per cent year on year in January, against a growth of 1.2 per cent in January 2024. This was above the 3-month average growth of 1.1 per cent and above the 12-month average growth of 0.8 per cent.

Keep ReadingShow less
Return to office boosts retail footfall, midweek shopping

Return to office boosts retail footfall, midweek shopping

High streets need to optimise for midweek office workers as Brits return to office, as shown by latest data on footfall, suggesting areas of focus for retailers such as extending trading hours in the evening and paying attention on grab-and-go meals.

According to the latest data from retail tech specialist MRI Software, retail footfall bucked seasonal trends in January, rising +1.4 per cent year on year across all UK retail destinations,

Keep ReadingShow less
Alcohol free beer sales

Alcohol-free beer sales

REUTERS/Jose Luis Gonzalez

December overtakes Dry January in alcohol-free beer sales

Sales of low and no-alcohol beer were 20 per cent higher in December than January, shows recent data, suggesting that traditionally the month of abstinence has been overtaken by December in terms of alcohol consumption.

According to a recent report in The Times, supermarket Tesco experienced record demand for alcohol-free beverages in the four weeks running up to Christmas with sales up by more than 15 per cent on the previous year. The demand was largely driven by young Brits.

Keep ReadingShow less
Brits turn to scratch cooking

Brits turn to scratch cooking

iStock image

Growth in grocery retail steady as Brits turn to scratch cooking: NIQ

Cost of living is still consumers’ number one concern, shows recent data, highlighting how shoppers are turning to scratch cooking to both save money and have a healthier diet.

According to new data released today byNielsenIQ (NIQ), total till sales grew at UK supermarkets (+5.3 per cent) in the last four weeks ending 27th January 2025, up from +3.6 per cent recorded in December.

Keep ReadingShow less