2025 continues to be a defining year for retail and leisure finance leaders with a slow and relentless accumulation of cost pressures alongside the wider geopolitical challenges faced in recent years
As the year continues to unfold, finance leaders across the UK’s retail and leisure sectors are navigating a landscape shaped not by sudden shocks, but by a slow and relentless accumulation of cost pressures. From rising costs of employment, taxes to reduced government relief, the financial architecture underpinning consumer-facing industries is being redefined and the implications are profound.
Shared Pressures Across Retail and Leisure
From April, a series of fiscal changes came into effect that have reshaped the cost base for labour-intensive businesses. Employer National Insurance Contributions rose while the threshold for contributions dropped. The National Living Wage increased significantly, and business rates relief was cut.
These changes are impacting both sectors in similar ways:
- Labour cost inflation is squeezing margins for retailers, gyms, cinemas, and foodservice operators alike.
- Reduced reliefs are hitting high street chains and leisure venues that rely on footfall and discretionary spend.
- Consumer confidence remains fragile, with inflationary pressures dampening demand across non-essential categories.
Helen Dickinson, Chief Executive of the British Retail Consortium, noted:
“These factors are diminishing retailers’ capacity to absorb price pressures, making it unlikely for prices to decrease.”
The same sentiment is echoed across leisure. According to the Night Time Industries Association:
“The cumulative impact of rising costs and reduced support is threatening the viability of venues that are central to local economies and cultural life.”
Between January and March, the UK saw an average of 20 hospitality venues close each week. Since October 2024, over 80,000 jobs have disappeared — many from independent operators embedded in retail precincts and leisure hubs.
The Entertainer confirmed that plans for 2 new stores were abandoned, with CEO Andrew Murphy the increase in the National Insurance costs cited as a key factor.
“We were just about to initiate the work and unfortunately the changes to National Insurance in particular just tipped that balance so those stores will now not be opening”
Dean Banks, a chef and entrepreneur, recently cancelled a 200-seat restaurant project after calculating that the new tax burden would add over £100,000 to payroll costs.
“It just didn’t make sense anymore,” he said. “We were ready to go, but the numbers stopped adding up.”
Strategic Reallocation and Investment Risk
Wells & Co, a UK-based hospitality group, has shifted its investment strategy to continental Europe, citing the UK’s increasingly hostile tax environment. For CFOs managing multi-site portfolios across retail and leisure, this signals a growing need to reassess geographic exposure and capital deployment.
The pressure is not limited to hospitality. Leisure operators — from boutique fitness chains to entertainment venues — are reporting similar concerns, with some pausing expansion plans or exploring international markets with more favourable tax regimes.
Intelligent Procurement: A Shared Strategic Lever
Amid these fiscal headwinds, one area is proving its strategic value across both sectors: smarter procurement. EBIT, a procurement partner to UK businesses, is helping operators rethink indirect spend from logistics and consumables to professional services and utilities.
EBIT’s flexible models are designed for CFOs seeking margin protection without compromising operational integrity.
As Retail Revealed advised:
“Get lean behind the scenes. Look for ways to tighten up operations without compromising service — whether that’s renegotiating contracts, adopting affordable tech, or simplifying processes.”
Stephen Montgomery, Director of the Scottish Hospitality Group, added:
“Efficiency has never been more critical. We need to sharpen operations and rethink traditional models — or risk being left behind.”
EBIT’s approach includes:
- Cost benchmarking across indirect categories
- Supplier renegotiation and contract optimisation
- Strategic sourcing aligned to business goals
This is not simply about cost-cutting. It is about building operational resilience — a critical differentiator in a year where survival depends on agility and precision.
A Sector Intertwined with Consumer Experience
Retail and leisure together contribute over £150 billion to the UK economy and employ millions. Their health directly influences footfall, dwell time, and consumer spend across high streets, shopping centres, and entertainment districts.
According to Coface UK:
“Retailers are adapting to evolving shopping habits, accelerated by the pandemic, while managing rising costs and fierce competition.”
And as Retail Revealed concluded:
“This year may feel like a balancing act, but it’s also a time for considered choices and clear communication.”
Kate Nicholls, CEO of UKHospitality, captured the broader sentiment:
“We’re not asking for handouts. We’re asking for a fair shot at survival.”
For finance professionals in retail and leisure, that survival will not come from Westminster alone. It will come from within — through innovation, collaboration, and smarter decision-making.
Get in touch with us now and take the first step toward transforming your procurement expectations.
Are you looking to drive value to your business? It may be to offset increasing costs elsewhere or to free up time and budget to focus on your strategic goals. If you recognise that improved procurement practices and performance can be a driver to this, we would love to talk with you, understand the challenges you face and the opportunities these bring to drive your business. Our average client ROI remains 5:1
We’re proud of the clients we work with and the projects we have completed. The savings and service improvements we have delivered have helped many companies add value to their bottom line. Our average ROI remains 5:1 across our client engagements. If you want to find out how we can make a difference to your business start the conversation.
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NatWest Retail & Leisure Outlook 2025
Coface UK Sector Snapshot: Retail Trends 2025
Retail Insight Network: Rising Costs Threaten UK Retail Recovery