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The British Retail Consortium (BRC) has warned that more than half of the country’s retailers are likely planning to slash staffing, after its latest survey of sector CFOs and Finance Directors indicated a steep climb in anxiety surrounding labour costs over the next year.
The trade organisation’s questionnaire revealed that 55% of CFOs were looking to “reduce office headcount” and 42% to additionally close stores.
It also showed that 84% of CFOs placed labour and employment costs in their top three worries, soaring from 21% last July, which the BRC said have taken priority since the Employment Rights Act came into effect in January.
CFOs also cited (77%), surging input costs (39%), and the growing tax and regulatory burden (29%) as primary concerns.
On top of reducing staff and closing shops, 61% of CFOs said they would cut workers’ hours and overtime, while 45% said they would halt recruitment.
68% of retailers said they would compensate for a lowered employee count by “driving higher productivity”, while 61% said they would through “investment in automation”.
The BRC said the Employment Rights Act has stoked unease within retailers because of the potential for clauses such as on guaranteed job hours to leave them with substantial extra cost while reducing job flexibility and opportunities.
It added that pressure is increasing as the act’s secondary legislation goes out for consultation.
This news comes as retail employment costs rose by £5bn in 2025, which the BRC attributes to hikes to employer National Insurance Contributions and an increased National Living Wage.
The group said the changes have put the cost of employing a full-time entry-level worker up by 10% and 13% for a part-time worker. It added that at the same time, youth unemployment has risen to 15.9%, with 730,000 under-24s not in work.
It added that while retail is the largest private-sector employer and offers a significant number of part-time and entry-level opportunities, the industry has shed 74,000 jobs in the past year and more than 250,000 over the last five.
Helen Dickinson, chief executive at the BRC, said: “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.
“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. The Employment Rights Act is the biggest shakeup of employment rules in a generation, and how it is delivered will make or break job opportunities.”
She added: “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 9-5 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.”
