Independent retailers navigating tough conditions

In particular, when asked what they would like to see prioritised in the forthcoming Autumn Budget, retailers are especially concerned that business profitability should be protected. This was the leading response by some way cited by 44% ahead of technology adoption in second place (34%). This contrasts with the all-sector response where it was almost exactly the other way around (technology 44%, business profitability 35%).

Retailers also flag further tax rises and employment costs as two of their key concerns going forward, more so than other sectors where inflation was the primary issue. This no doubt reflects the disproportionately high impact of the 2024 Budget changes on retailers, and the continued frustrations on business rates.

These findings underline that, even though retailers are exceptionally agile and resilient, conditions are very challenging. The British Retail Consortium (BRC) has estimated that the NIC and national minimum wage increases from last year’s Budget will cost the industry £5bn in 2025-26 – heaping more cost pressure onto already stretched business models.

This comes against the backdrop of a difficult consumer market. KPMG’s consumer research finds that whilst 50% of people are able to spend reasonably freely and only 17% are having to actively cut discretionary spend, concerns about the UK economy, plus the rising cost of groceries and utilities, are keeping consumers thoughtful about spending.  Many customers are postponing the purchase of big ticket items or, where they are spending (such as on a holiday), they are looking for ways to bring the outlay down (going for fewer nights, cutting back on extras). Customers are scrutinising value for money very carefully – they are driven by value, not volume when they do spend.

Whilst the number of people feeling financially secure has risen this quarter to 58%, half of people (51%) feel that the economy is still worsening, which is why key consumer sentiment trackers are producing media headlines of low consumer confidence.

Consumers are also placing a high value on ease of purchase and convenience. With so many options out there for customers, including not only established giants like Amazon but Chinese marketplaces such as Temu and Shein, pre-loved specialists like Vinted, and social media channels like TikTok, it is hard for smaller independent retailers in particular to achieve market traction beyond their core customer base.

On a positive note, UK retail performance has been creditable so far this year. The KPMG/BRC Retail Sales Monitor shows growth in retail sales of 2.6% across the first half of 2025 – considerably higher than growth in UK GDP. In June, growth came in at 3.1% with areas such as furniture and homewares performing well and retailers are, in the main, telling us sales are strong through July and they feel positive into August and the key month of September

In other words, there are some green shoots coming through, with hopes that summer will be a good period – followed by the prospect of the ‘golden quarter’ as the build up towards Christmas begins.