Retailers in UK Plan to Cut Staff Hours and Jobs as Employment Costs Rise
Retail businesses across the United Kingdom are preparing to reduce staff hours and cut jobs because their employment costs are increasing and they feel negative about the economy.
A new survey by the British Retail Consortium (BRC), which represents many of the country’s biggest retailers, shows that many finance leaders in the retail sector are worried about the future. The survey found that 69% of finance directors feel “pessimistic” or “very pessimistic” about the economic outlook. This is higher than last July, when 56% felt negative. Only 14% said they felt optimistic, although this is slightly better than the 11% recorded in July.
Because of these concerns, many retailers are planning to lower their staffing levels. More than half (52%) of finance bosses said they expect to reduce staff working hours or cut overtime. Nearly half (48%) said they plan to reduce jobs at their head offices. Around one-third (32%) said they are likely to cut jobs in their physical stores.
These job reductions could create more challenges for young people. Retail and hospitality often offer entry-level jobs that help young workers gain experience. If companies reduce hiring, fewer opportunities will be available for those starting their careers. Youth unemployment has already been rising, and further cuts may increase pressure on the government to create solutions.
Over the past year, the retail sector has already lost 74,000 jobs. One reason for this is the growing use of technology. Many retailers have introduced artificial intelligence tools for marketing, stock management systems, and automated checkout machines. While these technologies can improve efficiency and reduce costs, they also reduce the need for staff.
Retailers say they plan to use even more technology in the future to improve productivity. According to the BRC, employment costs increased by £5 billion in 2025. This rise was mainly caused by higher employer National Insurance contributions and an increase in the legal minimum wage. As a result, businesses are trying to find ways to manage their expenses. For many, this means hiring fewer workers or cutting back on staff hours.
Labour costs have become a major concern. In the latest survey, 84% of finance bosses said labour costs were among their top three worries. This is a significant increase from 21% in July. The sharp rise shows how strongly retailers feel the pressure of higher wage bills and related expenses.
Retailers are also facing strong competition from low-cost online companies such as Shein, Vinted, and Temu. These online businesses often sell products at very low prices, making it difficult for traditional stores to compete. At the same time, customer demand has been weak. Many households are dealing with higher energy and food bills. Some families are also trying to save money because they are worried about job security and global political tensions.
Helen Dickinson, the chief executive of the BRC, said that everyone wants more high-quality and well-paid jobs. However, she explained that retail has already lost 250,000 jobs over the past five years. She warned that youth unemployment is rising quickly.
Dickinson pointed out that the economy is expected to remain fragile. Wage growth is weak, unemployment is increasing, and consumer confidence remains low. All of these factors suggest that demand in the retail sector may continue to fall. At the same time, businesses are facing higher costs, including rising prices for goods and materials, higher wages, and new rules introduced by the government.
One major issue is the government’s new employment rights bill. This law will gradually introduce new protections for workers starting in April and continuing over the next few years. Dickinson said that the final details of this bill will be very important for the future of jobs in retail.
She explained that, if managed carefully, these reforms could improve working standards while still protecting flexible and entry-level roles. Many retail workers rely on part-time jobs or flexible schedules because they cannot work traditional nine-to-five hours. However, if the government does not consider business needs, new rules such as guaranteed hours or increased union rights could make it harder for retailers to remain flexible.
Dickinson warned that too many complex rules could reduce entry-level and part-time opportunities. She said this would be especially harmful at a time when the country needs more job opportunities, not fewer.
Overall, the retail sector in the UK is facing a difficult period. Rising employment costs, weaker consumer demand, stronger online competition, and economic uncertainty are all putting pressure on businesses. In response, many retailers are cutting staff hours, reducing jobs, and investing in technology to improve efficiency.
While these steps may help businesses control costs, they may also lead to fewer job opportunities, especially for young people. The next few months will be important as retailers adjust to rising costs and as the government finalizes new employment laws. The balance between protecting workers and supporting businesses will play a key role in shaping the future of jobs in the UK retail sector.
Published: 20th February 2026
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