Today’s news in brief-1/4/25

Retailers are bracing for a £5.56bn rise in costs following the implementation of recent Budget measures, including higher National Insurance contributions and an increased minimum wage. According to Retail Economics, these changes will force businesses to absorb £1.76bn in profit losses while passing £1.72bn onto consumers through price hikes. Chancellor Rachel Reeves opted against providing relief for retail, hospitality, and leisure sectors, despite calls from businesses. Employers’ NI contributions have risen from 13.8% to 15%, and the National Living Wage has increased by 6.7% to £12.21 per hour. Retailers resisted price increases in March despite mounting cost pressures, instead relying on promotions to attract cautious shoppers. The BRC-NIQ Shop Price Index reported a slight easing in deflation, with overall shop prices down -0.4% year-on-year. Non-food inflation rose marginally to -1.9%, while food inflation climbed to 2.4%. Helen Dickinson of the BRC warned that upcoming tax changes and packaging levies could push inflation higher, with retailers facing an additional £7bn in costs. Seasonal promotions, particularly in clothing and footwear, helped maintain consumer interest amid weak demand. Take-home grocery sales rose by just 1.8% in March, the slowest growth since June 2024, as retailers ramped up promotions to attract budget-conscious shoppers. Kantar reported £2.6bn spent on discounts, with Aldi and Lidl continuing to expand their market shares to 11% and 7.8%, respectively. Ocado remained the fastest-growing grocer, with sales up 11.2%, while Tesco and Sainsbury’s also saw gains. Despite financial pressures, consumers indulged in Easter treats, with £134m spent on chocolate eggs. Mike Ashley’s Frasers Group has increased its stake in THG to 10.92%, following the online retailer’s successful £90m fundraising round. Founder Matthew Moulding contributed £60m, while Frasers invested £10m to support the demerger of THG’s Ingenuity division. The move aims to streamline THG’s operations, focusing on its Beauty and Nutrition divisions. Despite a 2.6% revenue dip in Q4, THG’s full-year performance met expectations, with beauty sales rising 4.6%. Frasers has been actively expanding its retail investments, recently increasing its stake in AO World to 25.01%. Asda has launched a two-month trial of live facial recognition technology in five Greater Manchester stores to tackle shoplifting and violence against staff. The system cross-references CCTV footage with a database of known offenders, alerting security teams in real time. The retailer reported 1,400 assaults on staff last year, part of a broader surge in retail crime highlighted by the BRC. Marks & Spencer is injecting £50m into its North West store network, creating 300 jobs and adding 100,000 sq ft of retail space. The investment includes three store renewals and five new locations, part of M&S’s strategy to enhance its store portfolio. Upgrades include expanded food halls, modernised clothing sections, and energy-efficient designs. New stores in Warrington, Speke, and Thornton-Cleveleys will offer wider product ranges, while existing outlets like Bolton’s Middlebrook Retail Park will see significant expansions. Property director Will Smith emphasised the retailer’s commitment to local suppliers and sustainable growth.