Christmas has been and gone and the results from peak trading are starting to rush in, with plenty more on the way.
Tesco, M&S, Lidl, Mamas & Papas, and The Cotswold Company are among those that have reported strong growth or best-ever Christmas sales, but a few are worried about what 2025 has in store.
A new survey by Grant Thornton’s business outlook tracker revealed 54% of firms said they would need to hike prices for customers due to higher employment costs from the Budget.
With this in mind, Retail Week looks at which retailers have spoken about potential price rises in 2025 as they look to mitigate costs.
Next
Posting a 6% increase in sales and adding £27m to its full-price sales in the nine weeks to December 28, Next yet again pulled off an impressive trading period.
Despite increasing its full-year profit guidance by £5m to £1.01bn, the high street behemoth announced it will add “unwelcome” price rises to balance its estimated £67m in increased wage cost following the Budget.
It’s also expecting to pay £11m to workers currently earning the national living wage (NLW) as well as paying £10m in raising workers wages for those currently paid more than the NLW.
In a statement to the markets, Next said it plans to offset the added costs through: “operational efficiencies and other cost savings, and a one percent increase in prices on like-for-like goods, which is unwelcome, but still lower than UK general inflation.”
Greggs
Greggs announced it surpassed £2bn in sales during the 2024 financial year, but upcoming cost pressures mean it will have to increase the price of some goods.
Chief executive Roisin Currie admitted that to cope with inflation pressures, it will have to pass a “minimal amount of price rises on to customers” potentially in the “5 pence to 10 pence sort of range”.
Speaking to the press, she added that Greggs is focused on protecting its value proposition and that the national living wage increase can be positive.
“The national living wage should put more money into the consumer’s pocket. So, therefore, in terms of the economy growing, that should be a key piece that really helps us to grow across this year.”
Marks & Spencer
Recording “another good Christmas”, Marks & Spencer reported a 5.6% growth in total group sales to £4bn, yet challenges from the Budget may rear its ugly head.
In a call to the press, M&S interim chief financial officer Jeremy Townsend said inflation pressures are increasing in the market and the retailer will do “everything we can to offset those.”
He continued: “We’ll be looking to hold our clothing prices as flat as possible, and we’ll inflate behind the food market.
“I think what we’re looking at in the UK is some challenge around input cost increases, but we’ll do everything we can to offset that and look to pass on as little of that as possible.”
Chief executive Stuart Machin said to offset these cost pressures, it will have to sell more and more. He emphasised that the continuous focus on growth is “critically important” going forward.
Seasalt
Another good performance over Christmas as Cornish retailer Seasalt saw total sales grow 10% year on year in the five weeks to December 30.
Chief executive Paul Hayes said this success came “in spite of the current economic environment”.
He anticipates “cost pressure” in 2025 stemming from the Budget, and is focused on cost management to drive growth.
Hayes told Retail Week that he is “very aware” of the cost of living pressures on customers and the effects of passing on price increases as a “measure to counterbalance” the Budget.
“Within the business, we are considering a whole host of measures to mitigate the impact of the recent Budget so that it doesn’t simply fall to our customers to carry the burden,” he said.
“This includes our usual price reviews, along with a heightened focus on cost management in order to achieve our ambitions this year, maintain the strength of our business and brand and drive profitable growth.”
Tesco
Hailing its “biggest ever Christmas”, Tesco saw shoppers flock to its stores and website for festive food.
For 2025, chief executive Ken Murphy said the retailer is looking at an approximate extra cost of £250m a year once the national insurance contribution rise takes hold.
To combat this, Murphy said it has started negotiations with its partners over specific wage rises, but this won’t be finalised for a couple more months.
“We need to look at a couple of things that pertain particularly to Tesco as opposed to the wider environment,” he said.
“This year we’ve seen a headline rate of inflation above 3% from Kantar – our rate of inflation in Tesco was considerably lower than that.”
While not confirming price rises for customers, Tesco hasn’t ruled them out either.
Sainsbury’s
A solid Christmas performance has meant Sainsbury’s will become the best-paying UK grocer from March as it will raise pay for hourly-paid colleagues by 5%.
However, this will be split into two separate increases to manage what chief executive Simon Roberts called a “particularly tough cost inflation environment.”
During a call to the press, Roberts said the national insurance changes are “unprecedented” and will bring “inflationary pressures”.
“We said in November we’re going to do everything we can to mitigate the impact but there’s no doubt there’s a lot of inflation building in the system, especially in fresh food.
“Inflation is rising faster in fresh food than elsewhere. The cost pressures coming at the industry have substantially stepped up.”
Time will tell if Sainsbury’s has to introduce price rises as food inflation climbs back up.
As we get closer to April, expect to see more price hikes from businesses and customers holding on to their purse strings as a result.
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