Prime minister Keir Starmer's warnings about the state of the British economy and the likely need for tax increases in next month's budget have caused consumer confidence to plunge this month, according to a survey published on Friday.
The GfK Consumer Confidence Index dropped to a six-month low of -20 in September from August's -13, which was the joint-highest in nearly three years.
A Reuters poll of economists had pointed to another reading of -13. Instead the reading marked the biggest September drop since 1976.
Starmer and chancellor Rachel Reeves were elected in July, vowing to rebuild the economy after inheriting what they said was the worst economic circumstances since the Second World War, prompting some business leaders to complain that the message of doom and gloom could hurt confidence and growth.
Reeves has said she will strip a 200-pound annual fuel subsidy from 10 million pensioners and warned taxes were likely to rise by more than she had judged necessary just weeks earlier, before the election.
Neil Bellamy, consumer insights director at GfK, said households appeared to be responding to the messages by Starmer about the need for a "painful" budget due at the end of next month and the announcement of some early cost-cutting measures.
Official data published on Friday also showed Britain's public debt had hit 100% of economic output last month, a level not hit on a sustained basis since the 1960s.
"Following the withdrawal of the winter fuel payments, and clear warnings of further difficult decisions to come on tax, spending and welfare, consumers are nervously awaiting the Budget decisions on Oct. 30," GfK's Bellamy said.
NOT ENCOURAGING
All five measures of confidence in the GfK survey - the longest-running measure of British consumer sentiment - fell this month with views on the economy over the coming year down by 12 points, GfK said.
"Despite stable inflation and the prospect of further cuts in the base interest rate, this is not encouraging news for the UK's new government," Bellamy said.
The Bank of England kept interest rates on hold on Thursday after a rate cut in August, but Governor Andrew Bailey said he was optimistic that the central bank would lower rates further.
The GfK survey of 2,003 people took place between Aug. 30 and Sept. 13.
Separately, official data published on Friday showed shoppers were in buoyant mood in August.
Sales volumes jumped by 1.0 per cent compared with July, more than double the 0.4 per cent increase expected by most analysts in a Reuters poll. Sales in July rose by 0.7 per cent, up from a previous estimate.
Some supermarkets and clothing retailers reported a boost because of warmer weather and end-of-season sales, the Office for National Statistics said.
"Looking at the broader picture, retail sales have also increased across the three month and annual period, following strong growth from online retailers," ONS Chief Economist Grant Fitzner said.
"However, sales overall remain slightly below their pre-pandemic level," he said.
Sterling rose after the retail sales figures were published and was up by half a cent against the US dollar at 0730 GMT as investors took the data as a sign of momentum in the economy.
Following a surge in inflation in 2022 that hit consumer spending power for much of the following two years, a slowdown in price growth, faster increases in wages and an interest rate cut by the BoE in August have helped to restore some of the lost living standards.
Recent reports from British retailers had shown discretionary spending remained under pressure, with fashion retailer Primark reporting a fall in UK underlying sales in its latest quarter and B&Q and Screwfix owner Kingfisher saying demand for kitchens and bathrooms was weak.
But Next said on Thursday it had seen better-than-expected sales in the first six weeks of its second half, which reflected an improvement in the weather but "big ticket" home furnishing items remained a difficult market.
Most shoppers like the use of technology in the stores though frustrations emerge when that tech falls short of expectations, shows a new report, also highlighting retailers' enthusiasm towards adaptation of technology.
According to new insights from the Virgin Media O2 Business Movers Index, 77 per cent of Brits use tech to enhance in-person shopping.
Retailers too are undergoing a digital makeover.
42 per cent have adopted new tech in the last year to improve operations, with a third (30 per cent) aiming to boost sales and customer connections.
This wave of technology investment is driving optimism for 2025, as 82 per cent of retailers express confidence in their business outlook.
One in three Brits (34 per cent) have spent more time in stores or returned due to enjoyable or useful technology, rising to 57 per cent of 25-to-34 year olds.
The top tech features enticing shoppers to visit in person include self-service checkouts (29 per cent), high-speed WiFi (22 per cent), good mobile connectivity (21 per cent), click and collect pick up (21 per cent) and scan and go checkout-free shopping (20 per cent).
While 44 per cent of Brits feel UK retail stores have the right level of technology, frustrations emerge when that tech falls short of expectations.
Over a third (37 per cent ) of shoppers, and 54% of those aged 18-to-24, have left or avoided returning to stores due to complicated or frustrating tech.
Some of the biggest tech frustrations include self-checkout machines (33 per cent ), AI-powered shopping assistance (19 per cent), barcode scanners (18 per cent ) and mobile apps (e.g. scan and go) (16 per cent).
Jessica O’Conner, product director at Virgin Media O2 Business, said, “Retail has faced more disruption in the past five years than the previous twenty-five, with challenges like inflation and rising interest rates.
"Yet, retailers are charging into the year with confidence, embracing innovative tech to transform the customer experience.
"From virtual reality changing rooms to high-speed WiFi, Virgin Media O2 Business is at the forefront, helping retailers create smarter, more engaging in-store experiences for customers.”
Two shops in Cornwall have been ordered to close for three months for selling illegal tobacco.
Truro Magistrates’ Court on Tuesday (25) granted the closure orders for Saltash Smoke Point, Fore Street, Saltash and Zabka, Commercial Street, Camborne.
Devon and Cornwall Police submitted two closure order applications to the court after Cornwall Council’s Trading Standards team supplied evidence of illegal tobacco sales at both premises.
The application was supported by intelligence from members of the public that both shops had been selling illegal vapes, and supplying vapes to under 18s.
The application also included information about the public health risks of illegal tobacco, as well as the potential harm vapes can cause when used by children.
Elizabeth Kirk, team manager at Cornwall Council’s Trading Standards, said: “I’m delighted that we have been able to disrupt the illegal activity taking place at these premises.
“This is a brilliant example of how we work with our partners to target businesses that are not complying with the law and I’d like to thank Devon and Cornwall Police for all their work in securing these orders from the court.
“We will not tolerate people putting our communities at harm and will take action when there is evidence that shops or individuals are supplying illegal products.”
Ruth Goldstein, Assistant Director of Public Health at Cornwall Council, said, “Smoking is responsible for almost 1,000 deaths in Cornwall each year and the sale of cheaper illegal tobacco can cause serious harm to public health because it reduces smokers’ motivation to quit.
Sophie Curtis, Partnership Inspector for Cornwall at Devon and Cornwall Police, said, “I’m pleased at the outcome of these closure orders which send a message that the illegal sale of tobacco products or of illegal, unregulated vape paraphernalia won’t be tolerated in Cornwall.
"The same goes for the sale of vape products, regardless of their provenance, to children. All of these things bring harm to our communities.
“This is one example of effective partnership working. Sara Young, the Vulnerability Lawyer for Devon and Cornwall Police in Cornwall worked closely with Cornwall Council to put together the closure orders based on the work undertaken by Cornwall Trading Standards and the intelligence submitted by members of the public."
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WH Smith branch in Orpington on January 23, 2025 in London, England.
WHSmith has on Friday announced the sale of its UK high street business to Modella Capital, in a move to concentrate on its higher-growth travel retail markets.
The deal, which values the high street business at £76 million on a cash and debt-free basis, will see WHSmith receive gross cash proceeds of £52 million.
The sale marks a significant strategic shift for WHSmith, allowing the management to focus on the substantial growth opportunities within its key travel markets. Over the past decade, WHSmith has increasingly focused on its travel business, which in the last financial year, accounted for 75 per cent of the group's revenue and 85 per cent of its trading profit.
“As we continue to deliver on our strategic ambition to become the leading global travel retailer, this is a pivotal moment for WHSmith as we become a business exclusively focused on travel,” Carl Cowling, group chief executive, commented
The travel business operates across 32 countries and includes major airport locations, hospitals, and rail stations, both in the UK and internationally. The company will continue to trade under its historic 233-year-old brand name within its travel divisions.
“high street is a good business; it is profitable and cash generative with an experienced and high-performing management team. However, given our rapid international growth, now is the right time for a new owner to take the high street business forward and for the WHSmith leadership team to focus exclusively on our travel business," said Cowling.
Under the new ownership, the high street business will be led by Sean Toal, the current CEO of the high street business, and will eventually rebrand as TGJones, following a short transitional period operating under the WHSmith brand. All stores, colleagues, assets, and liabilities of the high street business will transfer to Modella Capital as part of the transaction.
Retailers association welcomes new chapter for WHSmith high street stores
The British Independent Retailers Association (Bira) has welcomed the announcement, while expressing cautious optimism for the future of these important retail spaces.
“The sale of WHSmith's high street business to Modella Capital represents a significant change for the UK retail landscape, but importantly, it appears these stores will continue to operate under new ownership rather than close entirely,” Andrew Goodacre, Bira CEO, said.
“We welcome Modella Capital's investment in these high street locations and hope this will secure the future of these stores, protect valuable jobs, and maintain essential services like Post Office counters that many communities rely upon.
“As champions of retail diversity and vibrant high streets, Bira sees potential in this transition. We hope Modella Capital will bring fresh ideas and renewed investment to these locations.
"The high street continues to face significant challenges, but this acquisition shows there is still value and opportunity in town centre retail when approached with the right business model and investment.”
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Pedestrians carry shopping bags from Selfridges and CANVVS as they walk past shops in central London on March 14, 2025.
British retail sales unexpectedly rose in February, figures from the Office for National Statistics showed on Friday, defying most forecasts from analysts who had predicted a fall against a backdrop of weak overall growth in the economy.
Sales volumes increased by a monthly 1.0 per cent, driven by non-food sales although supermarkets saw a drop after a surge in business in January, the Office for National Statistics said.
A Reuters poll of economists had pointed to a monthly fall of 0.4 per cent in sales volumes. The ONS revised January's month-on-month increase to 1.4 per cent from an initial 1.7 per cent.
“It was a positive month for household goods stores with their largest rise since April 2021, driven by hardware store sales,” ONS senior statistician Hannah Finselbach said, adding clothing sales also picked up due to widespread discounting.
Separate ONS data showed British households saved more money as a proportion of their income at the end of 2024 than at any point in nearly 15 years, apart from during the COVID pandemic.
The household savings ratio rose to 12 per cent in the fourth quarter of 2024, up from 10.3 per cent in the third quarter.
That bank of savings - and the possibility it could be unlocked - is one reason why some economists think tepid economic growth can pick up later in the year.
The ONS on Friday confirmed the economy expanded by 0.1 per cent in the fourth quarter of 2024.
Retail sales volumes for the three months to February rose by 0.3 per cent, the first increase by that measure since the three months to November.
How the economy fares after the imposition of tax hikes on employers, higher regulated energy bills and a raised minimum wage - all taking place next month - is a key question for policymakers.
"Food inflation remains high, meaning consumers are buying less, and retailers will be feeling cautious in the build up to changes to wage costs next week," said Oliver Vernon-Harcourt, head of retail at Deloitte.
Retail sales were 2.2 per cent higher than a year earlier, compared with the median poll forecast for 0.5 per cent annual growth.
This week, clothing retailer Next raised its profit outlook after better than expected trading. But home improvement retailer Kingfisher said consumer sentiment had been dented by measures in the government's budget last October.
The ONS data highlighted a stark contrast between food and non-food sectors, with the latter seeing 3.1 per cent increase in sales volumes. In contrast, food sales volumes fell by 2.0 per cent. Clothing sales showed a rebound, increasing by 2.3 per cent after a previous month's drop.
“Retail sales volumes came in better than expected in February. The trends from last month effectively reversed with food sales falling after a very strong January and non-food categories rebounding following last month's weakness,” Charlie Huggins, manager of the quality shares portfolio at Wealth Club, observed.
“These figures, along with yesterday's better-than-expected results from retail bellwether Next, indicate that consumers are still feeling confident enough to spend despite the gloomy economic headlines.”
However, he cautioned that “retailers are having to work harder than ever before” through “increased levels of discounting,” which could impact profit margins.
Consumer confidence improving
Jacqui Baker, head of retail at RSM UK and chair of ICAEW’s Retail Group, echoed this sentiment, stating, “Resilient retailers have dusted themselves off after a challenging December and seen incremental growth at the start of the year. Consumer confidence is improving and widespread discounting has tempted consumers to spend – renovating homes and gardens, bagging the latest iPhone or hitting the sales to update their wardrobes.”
She also pointed to a “20 per cent annual jump in sales” for jewellers, potentially linked to “a gold rush due to rising inflation and economic uncertainty.”
Thomas Pugh, economist at RSM UK, added: “There are finally some signs that the UK consumer is starting to come back to life. Consumer confidence ticked up again in March and the services PMI jumped higher, partly because of strong demand from consumers.”
He anticipates that “strong real household income growth should continue to drive a gradual increase in retail sales this year, even if overall economic growth remains relatively subdued.”
Despite the positive figures, concerns remain about the broader economic landscape. Silvia Rindone, EY UK&I Retail Lead, commented that the February’s retail sales figures continue to reflect a challenging landscape for retailers.
“Despite real wages continuing to grow at a fast pace, this increase has not yet translated into higher consumer confidence, which remains subdued. Ongoing geopolitical tensions and rising wage costs has meant retailers are continuing to navigate an uncertain trading environment,” she said.
However, she expressed optimism for “Easter and school holidays on the horizon” as potential sales boosters, while advising retailers to “remain agile and focused on customer-centric strategies” to navigate the ongoing economic uncertainties.
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x-hoppers debuts new AI upgrades built for retail’s frontlines, boosting security, team flow and in-store efficiency
x-hoppers, the leading AI-powered in-store communication platform, has announced new features to its connected store suite, designed to strengthen loss prevention, boost team productivity and automate key retail tasks, all in a single, unified system.
By combining hands-free headsets, AI-powered theft detection and real-time automation tools, x-hoppers helps retailers cut shrink, improve team coordination and deliver faster, safer in-store experiences. Built for the pace of frontline work, it replaces disconnected tools with one seamless solution, supporting associates and elevating the customer journey, from stockroom to checkout.
Retailers attending the Retail Technology Show (April 2-3, ExCeL London, Booth C40) will be the first to experience these innovations, already proven to reduce shrink by 60 per cent and detect up to 26 theft incidents per store daily, all before they escalate.
“Retail doesn’t slow down and neither can technology,” said Graham Dixon, chief technology officer, x-hoppers. “That’s why our team pushes continuous updates across AI, automation and usability. x-hoppers isn’t just a product, it’s a growing ecosystem designed to meet the changing pace of store life. Every feature we add is tested in real-world environments to ensure it works for retailers, not the other way around.”
Latest enhancements
The newest release reflects x-hoppers’ commitment to solving store-level pain points with practical, intelligent tools that scale.
1. AI-Powered Security & Theft Prevention
Enhanced AI Theft Detection with AIVA (AI Video Alerts): x-hoppers’ proprietary AI-powered security solution now builds on its proven success with upgraded gesture recognition technology, offering greater precision in detecting suspicious behaviour and identifying high-risk theft periods.
StaffSafe Integration: Theft-deterrent announcements help de-escalate incidents before they happen, while live alerts connect teams with remote intervention units for immediate response.
2. Workforce Optimisation
AI Assistant 2.0: Employees can now log in via voice authentication, receive real-time task recommendations and access multi-language training.
Intelligent Voice and Chat Agents: These digital agents bridge the gap between online and in-store operations, resolving customer queries, assigning tasks, and escalating alerts, all without manual input.
Dedicated Mobile App: The new channel offers greater flexibility, featuring push-to-talk, theft alerts and real-time notifications.
Customisable AI-Driven Smart Headsets: Designed for the dynamics of frontline work, now available in various styles for retail associates, security personnel and managers.
3. Task & Store Automation
MOOS Smart Shelf Integration: AI-driven restocking alerts, high-value item tracking and automated inventory replenishment, transforming stores into self-optimising environments.
Trello Integration: The new integration bridges task management and in-store execution by sending card assignments directly to the corresponding associate’s headset, turning digital workflows into immediate frontline action.
Proven at Scale
Since launching in April 2024, x-hoppers has already driven measurable results, with clients reporting:
60% reduction in shrink, detecting an average of 26 theft incidents per day before escalation.
35% increase in sales through faster, more personal customer service.
50% faster employee onboarding with real-time AI training and support.
3+ hours saved per employee per day through automation and hands-free communication.