High Street fashion under pressure amid rising costs and shrinking labour pool

Retail employment in the UK has entered a troubling downturn. According to the latest report by the Office for National Statistics (ONS), there were 2.73 million jobs in retail in June 2025. The four-quarter average, which smooths out seasonal hiring variations, stood at 2.78 million jobs, some 97,000 fewer than at the same point last year, and 393,000 fewer than in 2015. On a more detailed basis, full-time roles now number 1.28 million; part-time jobs at 1.50 million. Full-time positions are down 133,000 compared with a decade ago, while part-time roles have fallen by 258,000 over the same period.

For fashion retailers and interior design brands with physical stores, these figures are more than statistics—they point toward shrinking flexibility in staffing, rising overheads per employee, and increasing vulnerability.

National Insurance is a heavy burden on fashion’s frontline

A major contributor to the strain is the recent increase in employer National Insurance contributions (NIC). As of April 2025, the employer NIC rate rose from 13.8 percent to 15 percent, while the threshold at which employers must begin paying was reduced from 9,100 pounds to 5,000 pounds. For fashion retailers employing large numbers of part-time, entry-level, or seasonal staff, this represents a substantial cost increase in payroll.

According to Helen Dickinson, Chief Executive of the British Retail Consortium:

“Today’s figures are a stark warning: retail jobs have plunged to a record low with 97,000 jobs lost over the last year, and almost 400,000 lost over the last decade. The rising cost of NICs and NLW, together costing the industry over £5 billion this year, are hitting retail employment hard. And worse could be yet to come, with the Employment Rights Bill having a ‘materially negative impact on employment’ according to the OBR, and the threat of further cost rises at the Autumn Budget looming large.

“As costs mount on the industry, retail jobs are falling by the wayside. Whether it is the additional complexity wrought by the Employment Rights Bill, or a new surtax on large retail premises, the impact of these policies will be to drive up prices and hold back retail employment. It vital that the Chancellor’s Autumn Budget does not increase costs to the high street further, or else it will be working people who will pay the price as local, flexible jobs are lost, and the cost of living continues to rise.”

For many fashion brands, especially those with smaller margins or physical store footprints, the NIC changes translate to hard choices: reduce store staffing, cut hours, slow expansion, or pass costs onto consumers, risking price sensitivity and competitive disadvantage.

Brexit’s labour drain: Less EU, fewer seasonal hands

Compounding these cost pressures is a shrinking labour pool post-Brexit. According to research by the Centre for Economic Reform (CER), the new immigration system and the end of free movement have led to a shortfall of about 330,000 EU workers compared with what might have been expected had pre-2021 rules remained. In wholesale and retail alone, that equates to roughly 103,000 fewer EU workers, about 3 percent of the sector’s employment.

Fashion retailers (stores, stockrooms, visual merchandising, fitting rooms) often rely on flexible labour, part-time staff, and seasonal workers, roles many EU nationals filled. With reduced supply, businesses face tighter labour costs, wage inflation, or difficulty filling roles. At the same time, smaller retailers have less advertising reach, fewer incentive budgets, and weaker pull compared to big-box brands when recruiting locally.

Choices and consequences

What this means for the fashion sector is a narrowing of operational margin. Elevated labour costs (due to both NIC rises and a higher minimum wage), a thinner supply of workers, and falling retail jobs suggest that the high street is entering a period of retrenchment.

For interior-fashion hybrid brands with stores (e.g. home décor, furniture, textiles), the pressure is similar. Profit-sensitive purchases of store space, store staff, visual merchandisers, and support workers are all under cost pressure. Some may scale back store openings, employ fewer store hours, or shift more inventory online to reduce fixed-cost burdens.

If the Autumn Budget brings further increases in employer-related costs or regulatory burdens, the already vulnerable segments of fashion retail (small stores, startups, independent labels) may be forced to restructure, raise prices, or even close locations.

Ultimately, the confluence of rising NICs and reduced EU labour supply is altering the equation for what “affordable luxury”, “accessible fashion”, or “local retail” actually cost. Consumers may soon see the tangible results of these policy shifts, fewer stores, thinner staff, higher prices, even as brands attempt to preserve identity, aesthetic, and quality.