Retail employment in the UK is continuing to decline as rising labour costs and economic uncertainty reshape hiring across the sector, according to a new report from the British Retail Consortium (BRC).
The BRC says the retail sector has lost around 74,000 jobs in the past year, bringing total employment to roughly 2.76 million, the lowest level on record. Over the past five years, the industry has shed more than 250,000 roles, highlighting a sustained shift in the UK retail labour market.
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Retailers report that higher employment costs, changes to labour regulations and weak consumer demand are influencing staffing decisions. Many companies are responding by reducing staff hours, freezing recruitment and investing in automation to maintain productivity.
Rising labour costs reshape retail hiring
The BRC report links the decline in retail employment to a sharp increase in labour costs across the UK retail sector.
Employment costs rose by £5 billion in 2025, largely due to increases in employer National Insurance contributions and a higher National Living Wage. As a result, the cost of employing a full-time entry-level retail worker increased by around 10%, while part-time roles rose by more than 13%.
Retail finance leaders now rank labour costs among their main business concerns. In a BRC survey, 84% of chief financial officers said labour and employment costs are among their top three risks, compared with 21% in mid-2025.
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By GlobalDataHigher wage bills and tax changes are arriving at a time when retailers face tight margins and fluctuating consumer demand. Industry analysts note that retail remains one of the UK’s largest private-sector employers, making labour cost increases particularly significant for the broader job market.
Retailers plan staffing reductions and hiring freezes
Facing these cost pressures, many retailers are planning operational changes that affect employment levels.
The BRC survey shows 52% of retailers expect to reduce staff hours or overtime, while 32% plan to freeze recruitment in the coming months. Nearly half of companies are considering reductions in head office roles, and about a third are evaluating cuts to store staff numbers.
These measures reflect broader caution across the UK labour market. Business surveys show fewer firms are planning workforce expansion, as companies prioritise cost control and operational efficiency.
Retailers say the adjustments are intended to manage rising costs without immediate large-scale layoffs. Reduced working hours, however, could still affect overall employment levels and income stability for retail workers.
Automation and productivity investment increase
Many retailers are also turning to technology and operational changes to maintain productivity with smaller workforces.
According to the BRC, 68% of retail leaders plan to increase productivity initiatives, while 61% expect to invest more in automation and digital tools to offset labour shortages and rising wage costs.
Automation is already influencing retail employment trends. Self-checkout systems, digital inventory management and online fulfilment technologies are reducing the need for some in-store roles while creating demand for logistics and technical positions.
At the same time, industry groups warn that upcoming labour legislation could further influence employment patterns. Proposals linked to the Employment Rights Act, including guaranteed working hours, may increase administrative costs and reduce flexibility in staffing models if implemented without adjustments for the retail sector.
The BRC says the sector’s ability to sustain entry-level and part-time jobs will depend on how policy changes interact with rising costs and consumer demand.
Retail has traditionally provided a large share of flexible employment opportunities, particularly for younger workers entering the labour market.
