Online Retailers Are Not Immune

The collapse of Seraphine, a primarily online maternity fashion brand, is the latest sign that financial pressures are extending beyond the high street.

Mark Cunningham, Partner, commented:

The primarily online maternity fashion brand, Seraphine, going into administration is a reminder that it’s not just high street retailers struggling with higher staffing costs due to the Government’s tax and employment policies.

Lower-Paid Workforces Hit Hardest

Retail businesses with high numbers of lower-paid staff are being disproportionately affected by increases to National Insurance Contributions (NICs) and the national minimum wage.

Retail businesses that employ a high proportion of lower paid workers are among those facing the most financial pressure from higher NICs and minimum wage. While upfront employment rights improve conditions for workers, they present challenges for employers in managing costs and workforce flexibility.

Government Communication Is Key

As we approach the Autumn Budget, businesses are calling for more transparency and foresight from the Government regarding any potential changes to tax and employment legislation.

UK retailers, who are often mostly online like Seraphine, need clarity and advance notice from the Government on any planned tax or employment legislation before the Autumn Budget so they can prepare in advance. Although internet giants like Amazon can weather the storm of unexpected cost rises, partly through further automation, our home-grown online retailers, like Seraphine, clearly cannot.

Business Rates Reform Is Urgently Needed

High street retailers face additional hurdles with rising rents and increasing business rates.

Retailers operating on the high street also need more support. High-street retailers have to contend with the pressure of paying rent and business rates, both of which are increasing. A longer-term reform of the business rates system is needed, one that reflects the realities of modern retail and helps level the ground between online and high street businesses.

Uncertainty Ahead of the Autumn Budget

With consumer demand already showing signs of fragility, the prospect of tax rises in the upcoming budget only adds to the pressure.

Mark concluded:

Consumer demand is already fragile, and the prospect of tax rises in the Autumn Budget will only add to that uncertainty. Retailers need clarity and support from the government. Without it, one of the UK’s most visible sectors will be weakened even further and more household names could be lost.

Would you like to know more?

If you have any questions about the above, please get it touch with your usual Blick Rothenberg contact or Mark using the form below.