Retailers across the United Kingdom are preparing to reduce staff hours and cut jobs as rising employment costs and economic uncertainty weigh heavily on the sector, according to new research from the British Retail Consortium (BRC).
The latest BRC survey reveals that 61% of retail finance directors intend to reduce working hours or limit overtime. More than half (55%) said they plan to cut head office roles, while 42% are considering reducing store-based positions.
The findings raise fresh concerns about youth employment, with retail and hospitality traditionally offering entry-level roles for young workers.
The retail industry has already lost 74,000 jobs over the past year, partly driven by the adoption of new technologies such as AI-powered marketing tools, automated stock management systems and self-service checkouts.
Retailers told the BRC they plan to accelerate investment in technology and productivity measures after employment costs rose by £5 billion in 2025. The increase has been attributed to higher employer national insurance contributions and a rise in the statutory minimum wage.
The sector also faces intensifying competition from low-cost online platforms including Shein, Vinted and Temu, alongside subdued consumer demand as households contend with elevated energy and food bills.
The survey found that 69% of retail finance chiefs are now “pessimistic” or “very pessimistic” about the economic outlook, up from 56% in July last year. Only 14% described themselves as “optimistic”.
Helen Dickinson, Chief Executive of the British Retail Consortium, warned that the labour market impact could be significant.
“We all want more high-quality, well-paid jobs. But retail has already lost 250,000 roles in the past five years and youth unemployment is climbing fast,” she said.
She added that labour costs have become a dominant concern for businesses, with 84% of finance directors ranking them among their top three challenges — compared with just 21% last July.
“The economy is expected to remain fragile, with weak wage growth, unemployment rising and low consumer confidence, all pointing towards falling demand. At the same time, businesses face sharply higher costs, from rising input prices and wage bills to new burdens created by government policy.”
Retail leaders are also closely watching the government’s Employment Rights Bill, which will gradually introduce enhanced worker protections from April.
Dickinson said the legislation “will make or break job opportunities”.
“Done well, the reforms can raise standards while supporting flexible and entry-level roles that are vital for people whose lives don’t fit a fixed nine to five pattern. If the government fails to consider business needs on policies including guaranteed hours and union rights, they will add complexity and reduce flexibility, ultimately stripping away entry-level and part-time opportunities at precisely the moment the country needs them most.”
With labour costs climbing, automation increasing and consumer confidence under strain, UK retailers face one of the most challenging trading environments in recent years.
Industry leaders are urging policymakers to strike a balance between worker protections and business flexibility to prevent further job losses in a sector that remains a cornerstone of the British economy.