The UK retail sector is grappling with a convergence of challenges in 2025, as businesses navigate a complex landscape that threatens both growth and long-term survival. According to the British Retail Consortium (BRC), UK retailers brace for a £2.5 billion blow in 2025, following the Labour government’s budget announcement – ushering in sweeping changes that could reshape the future of the industry.
Financial pressures are increasing for retailers
Retailers are contending with financial pressures including increased National Insurance contributions, a higher National Living Wage, and reduced business rate relief. The British Independent Retailers Association (BIRA) described the budget as “the most damaging for independent retailers in recent memory.” With profit margins already squeezed, many UK retailers are being forced to find increasingly creative ways to maintain profitability amid rising costs.
The impact is already evident. Data by the BRC and Sensormatic show in-store sales have experienced minimal growth with the total UK retail footfall declining by 5.4% year-on-year in March 2025. This reflects shifting consumer habits in the face of ongoing inflation, posing a major challenge for the sector.
Amid these challenges, a less visible yet equally damaging issue is rising energy costs and the mis-selling of energy contracts by unethical brokers. Reports have found that 60% of retailers cite rising cost of energy as the biggest pressure on profit margins. These rising costs disproportionately affect retailers with a physical presence, who are already contending with falling footfall and the long-term consumer shift towards online shopping following the pandemic.
Rising energy costs
Unscrupulous brokers have been exploiting the vulnerability of retailers by embedding hidden commissions into energy contracts, leading to inflated costs that many businesses are unaware of. These hidden costs inflate bills and further threaten the financial health of struggling businesses.
Callum Thompson, CEO of Business Energy Claims, emphasises the severity of the situation: “Retailers are already under immense pressure from rising operational costs and shifting consumer behaviours. The added burden of hidden commissions in energy contracts is not just unethical – it’s detrimental to the survival of many businesses. Transparency and accountability in the energy broker market is more critical now than ever.”
This malpractice only worsens the strain on retailers, diverting funds that could otherwise be invested in staff wages, stock replenishment, or digital upgrades. The compounded pressure of surging costs and unethical broker practices threatens to undermine the foundations of the UK’s retail landscape.
Callum added: “Business Energy Claims has helped thousands of businesses across the UK – including many in the retail sector – recover millions of pounds in mis-sold energy contracts. We understand the unique challenges retailers face today and believe ensuring fair and transparent energy agreements is a crucial step toward achieving financial resilience in these difficult times. As retailers continue to fight for survival, it is imperative to foster an environment where retailers can operate sustainably and continue to positively contribute to the economy.”