"Changing consumer behaviour is continuing to make the trading environment challenging, with shoppers trading down, delaying purchases until promotions, and becoming increasingly selective. Despite an uplift in retail sales in 2025, this masks the persistent pressures that many businesses are facing. Rising employment costs - from the National Living Wage to National Insurance - have proved difficult to absorb or pass through in a market defined by fierce competition, price wars, and volatile demand patterns."
"The growing divergence in performance across the sector reflects another structural challenge: the accelerating pace of digital and AI-enabled transformation. Those able to invest in new technologies, automation and operational agility are pulling ahead, while others are struggling to keep up as tech‑savvy competitors move quickly to capture market share. Varied Christmas trading results highlighted these pressures, as well as the growing gap between winners and those falling behind."
34% of UK-based listed retailers issued profit warnings in 2025, the fourth consecutive year the sector proportion reached or exceeded that level. FTSE retailers issued 15 profit warnings in 2025, down from 20 in 2024, with nine warnings occurring in the second half of the year. The FTSE Personal Care, Drug and Grocery sector saw warnings rise to eight from five. Consumer behaviour shifted toward trading down, delaying purchases until promotions, and selecting more carefully. Retail sales rose in 2025 but masked persistent pressures from rising employment costs, fierce competition, price wars and volatile demand. Companies reported policy and geopolitical uncertainty as a leading factor. Digital and AI-enabled transformation created widening performance divergence across retailers.
Read at London Business News | Londonlovesbusiness.com
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