This article was written by an eCommerce expert at leading delivery management provider Scurri. To streamline your delivery management and perfect your post-purchase emails, get in touch with Scurri today!
The modern retail landscape is evolving rapidly, and with progress comes new challenges. As eCommerce grows and technology advances, UK retailers are faced with increasingly complex hurdles. From cybersecurity threats and trade tariffs, to the unprecedented cost of living crisis, there are numerous challenges retailers have to face.
Our latest report on the UK retail landscape shows that the next 12 months will be critical for retailers. With emerging technologies and risks, how retailers navigate these challenges could shape the future of the industry.
Expect significant headwinds
Cybersecurity and fraud risks top the list of challenges to performance and growth in the coming year for both mid-market (41%) and enterprise (46%) retailers.
Management of rising labour costs and fulfilment costs is critical, especially with National Insurance and minimum wage increases affecting margins 33% of mid-market and 30% of Enterprise.
Trade tariffs are increasing the cost of goods and manufacturing, with mid-market retailers (35%) more exposed.
Managing inventory across multiple sales channels (32% mid-market, 30% enterprise) and the cost of exchanges and returns continue to be operational pain points.
The cost of living crisis is leading to reduced discretionary spend, particularly impacting mid-market retailers (33%).
Cybersecurity and Fraud
Cybersecurity and Fraud risks are ultimately one of the biggest challenges retailers face to date. In a report launched by SoSafe, 13.82 trillion USD is the projected global cost of cyber crime by 2028, which is up 50% from 2024, indicating that threats are growing rapidly and are becoming much more sophisticated. Companies are now left with no choice but to introduce intense Cyber security protocols to avoid data breaches from occurring. Cyber attacks can happen to anyone.
From individuals, to governments, to businesses, you name it, and have become much easier for attackers to carry out, with phishing being the most popular choice of cyber attacks. Phishing involves tricking individuals into sharing sensitive information such as phone numbers or passwords, often impersonating somebody else. What makes this process so effective is the fact that it does not require complex skills, it relies on human error.
One effective way businesses can reduce the risk of cyber attacks is by implementing internal cyber security checks. In fact, over 55% of businesses have already introduced such measures to help ensure the safety and integrity of their systems. By conducting internal checks, businesses can identify potential weak points before they are exploited. System updates are just one way to attempt to reduce the risk, while educating employees within an establishment is another. By combining technology, policy, and awareness, companies can build a much stronger defence against cyber threats
Trade Tariffs
Trade tariffs are constantly evolving, with fluctuations becoming more frequent than ever in recent months. They can bring uncertainty to businesses if businesses have complex supply chains. This ongoing instability has posed significant challenges for retailers, particularly those involved in importing and exporting goods. The introduction of new levies, coupled with rising manufacturing costs, has created an unpredictable environment. As a result, many retailers are facing challenges that they must continuously adapt to.
Tariffs will always be prominent, and will never be a thing of the past. It is all about how businesses adapt and prepare. Retailers can overcome the challenges posed by tariffs through a combination of strategic planning, supplier diversification, and cost management.
One effective approach is to diversify their supply chain. This ultimately means sourcing products or materials from other countries and reducing their dependencies on one specific region.
Risk assessments and forecasting enable businesses to proactively prepare for potential challenges, allowing them to develop contingency plans rather than react under pressure. By identifying risks early and anticipating future issues, companies can make more informed, strategic decisions. Additionally, closely monitoring industry developments is essential to remain compliant and stay ahead of emerging trends, regulatory changes, or shifts in the market landscape.
Trade tariffs impact more than just the cost of imported and exported goods, they can also influence tax rates, wages and the overall pricing of goods and services across the economy. To help reduce this issue, businesses can negotiate contracts with suppliers in an attempt to lower overall costs for the business.
Rising Labour and Fulfilment Costs
Rising labour costs and fulfilment costs, such as wages, insurance and delivering goods are becoming more expensive. This is especially true now that National Insurance contributions and the minimum wage have increased, which directly impacts how much it costs businesses to hire and keep staff.
To manage these growing expenses, businesses can invest in automation and technology such as self-checkouts, AI-driven customer support, and smart stock management systems. These tools help reduce dependency on manual labour and improve operational efficiency. Additionally, retailers can streamline their operations by reviewing their supply chains and fulfilment strategies. Exploring more sustainable and cost-effective packaging can also reduce waste and drive savings.
Retailers that embrace innovation, rethink staffing models, and operate more efficiently will be better positioned to stay competitive. In the next 12 months, a sharper focus on cost-efficiency, employee retention, and smarter supply chain planning will be essential to overcoming the ongoing challenges of rising labour and fulfilment costs.
Cost of Living Crisis
The world we live in today is facing an on-going cost of living crisis in which individuals are having to sacrifice discretionary spending due to the increase in cost of goods and services. Everyday goods have seen an influx in price over the years and now, mandatory expenditures such as groceries, clothes, toiletries and more come at a cost and are squeezing consumers’ budgets.
Retailers are also feeling the impact of the cost-of-living crisis, with many reporting a decline in sales during December and January compared to the previous year. As consumers face reduced disposable income, they are cutting back on non-essential purchases and focusing on basic necessities. In response, retailers can play a supportive role by introducing initiatives that help ease financial pressure for their customers.
These may include loyalty programs, discount vouchers, and Buy Now, Pay Later options. Such initiatives not only provide consumers with greater financial flexibility, but also encourage repeat purchases and strengthen customer loyalty, benefiting both shoppers and retailers.
Looking ahead, the cost-of-living crisis is likely to remain an ongoing challenge for retailers over the next 12 months according to Scurri’s report.
As consumers remain to prioritise necessities, retailers must stay empathetic and innovative in how they support their customers. Those that invest in cost effective solutions will stand out more for retailers. In an increasingly price-sensitive market, adding value beyond the product will be key to staying competitive.
Managing Inventory Across Multiple Channels
The final challenge retailers face is managing inventory across multiple sales channels. With the rise of eCommerce, retailers are no longer selling through just one platform, instead, they’re often juggling a combination of physical stores, websites, apps, online marketplaces, and even social media shops. This makes accurately syncing inventory across all channels a complex and technical task.
Modern consumers demand seamless and convenient shopping experiences across all channels. Any disruptions can lead to frustration and a loss of trust. This highlights just how important accurate inventory management is in today’s retail landscape. If inventory isn’t updated in real time, it can lead to issues such as overselling, underselling, and stock inaccuracies, which as a result, will affect customer satisfaction and order fulfilment.
As more retailers shift to online selling, the risks associated with inventory management grow significantly. With global e-Commerce revenue amounting to 7 trillion USD in 2024, and expected to exceed 10 trillion USD by 2029, the pressure to operate efficiently across multiple channels is higher than ever.
In order to overcome this challenge, retailers must implement inventory management systems that provide real-time updates and visibility into product availability. This level of transparency not only helps prevent stock issues like overselling but also enhances the overall customer experience, ensuring shoppers can trust that what they see online is accurate and up to date.
As retailers navigate the year ahead, it’s clear that embracing new technologies, driving innovation, streamlining operations, and maintaining a customer-centric approach will be essential for staying competitive and up to date in a very challenging retail landscape.
Download the full report
The Future of Delivery & Post-Purchase Revealed
This three-part report brings fresh insights from over 120 UK retailers and 1,000 shoppers to help you focus on what matters most in the year ahead.