Convenience store body Association of Convenience Stores (ACS) has written to Chancellor Rachel Reeves MP to warn her and reiterate the impact of measures announced in the Budget on the UK convenience sector.
The letter outlines the two thirds of a billion pound cost to the convenience sector in 2025, consisting of a reduction in business rates relief from 75 per cent to 40 per cent, a reduction in the employer National Insurance Contributions (NICs) threshold from £175 a week to around £96 a week, an increase in the rate of employer NICs from 13.8 per cent to 15 per cent, and an increase in the rates of the National Living Wage – the headline rate of which will reach £12.21 per hour in April.
While some of the smallest businesses will be protected from the employer NICs changes through an increase in the Employment Allowance to £10,500, the majority of convenience stores will be seeing significant operating cost increases in the new year.
In the letter, ACS highlights the challenge of providing low-margin but critical services like bill payment, access to cash and Post Offices at a time when costs are going up and every inch of the store has to work as hard as possible to generate income.
ACS chief executive James Lowman said, "Thousands of retailers are looking at a pretty bleak picture in 2025. These are already challenging times for convenience stores in an extremely competitive market, but the additional costs that many are facing in increased business rates and wage bills cannot just be absorbed.
"It's important that the Government understands that while it makes difficult decisions on taxation and public finances, retailers will be forced to make their own difficult decisions on investment, staff hours and the price of products in store."
Figures from the latest edition of ACS’ Voice of Local Shops Survey cited in the letter reveal that almost one in four independent retailers (24 per cent) said that they have been able to keep their store open as a result of the business rate reliefs they receive, when otherwise it would be closed.
Almost one in four retailers (24 per cent) said they were able to provide more competitive pricing or promotions for customers as a result of rates reliefs they receive while one in five retailers (20 per cent) said that they have been able to make investments in their business due to the rates relief they receive.
About 30 per cent of retailers cited the increased cost of employment as their top policy concern next year.
The letter urges the Chancellor to create the right conditions for growth and investment in the convenience sector in the future. This means not just a commitment to not raising tax again during the duration of the parliament, but balancing the cost of doing business with the additional burdens of new regulations that will affect the convenience sector.
The full letter is available here: https://cdn.acs.org.uk/public/ACS%20letter%20to%20Chancellor%20-%20Nov%2024.pdf
