Retail Shenanigans: Why Sales are Sprinting or Stumbling in 2025
In a brand‑new BDO High Street Sales Tracker, retailers are seeing a +7.1 % rise in discretionary spending this January, thanks mainly to the online boom. But behind the shiny headline comes a less rosy picture: -0.8 % in overall sales earlier this year and a +15.5 % surge in e‑commerce.
Store‑front Performance: A Tale of Two Numbers
While brick‑and‑mortar shops posted a modest +3.2 % increase, that figure helped lift sales from a low of -4.2 % in the previous year. The gap underscores how the high‑street scene is still feeling the pinch from last year’s headwinds.
- Fashion retailers managed a +3.3 % jump in physical stores, climbing from the bruising -6.7 % of 2024.
- Homewares closed that gap with a +3.4 % lift after a slumped -10.1 % year.
Rain‑y days in January may have dragged footfall, but the online surge shows that digital outlets are stealing the spotlight.
Sophie Michael Weighs in
“These numbers may look peachy at first glance,” says BDO’s retail guru Sophie Michael. “But under the hood, the weak Christmas‑lead up has carried on into this year. If retailers can’t entice shoppers with deeper discounts, those postponed purchases will keep chipping away at already thin margins.”
The Cost Conundrum
On top of that, the nation’s wallet is tightening. National Insurance hikes are set to hit the payroll side of retailers hard—think big squads with modest pay. Coupled with a new National Living Wage, business rates, and the looming Plastic Packaging Tax, the invoice list is getting heavier.
Retailers are urged to juggle these rising costs while still investing in:
- Product development
- Customer service upgrades
- Tech innovation—AI is a must‑have for staying relevant
“A clear picture of supply‑chain cost hikes is essential,” Michael notes. “With many partners wrestling the same pressure, a domino effect is inevitable.”
Where It’s Going From Here
Already, 2024 saw a surge in job cuts and store closures. With the financial storm brewing for the next year, those trends are unlikely to soften in 2025, according to Michael. Retailers will need to be more strategic, perhaps leaner, and less reliant on traditional margins to keep the business afloat.
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