81% of Retail & Hospitality Businesses Admit Energy Models are No Longer Fit for Purpose

This article is provided by BRC Associate Member, SQE.

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For the UK’s retail & hospitality sector, energy has transitioned from a predictable utility overhead to a high-stakes strategic risk. As renewable generation expands and the grid undergoes an expensive electrification-driven overhaul, the market looks fundamentally different from the one most procurement strategies were designed for.

To understand the scale of this challenge, we commissioned a quantitative survey of 200 UK energy buyers. As an energy supplier built exclusively for Industrial and Commercial (I&C) businesses, we wanted to benchmark the reality on the ground. Representing organisations with annual spends ranging from £200,000 to over £6 million, the results confirm what we see daily: "business as usual" is no longer viable. For the majority of firms, staying still has become a quantifiable financial liability, compounded by a sharp rise in non-commodity costs and network charges.

Strategies Not Fit for Purpose

The survey results identify a structural mismatch between market reality and current operations. 81% of retail & hospitality businesses admit their current energy supply arrangements are no longer well-suited to today's market. This isn't just a reaction to unit prices. It is a recognition that the traditional model for buying and managing power is broken.

66% of retail & hospitality leaders recognise that making no significant change to their energy approach over the next few years carries a material financial risk. The era of "passive procurement" is over. Energy strategy is no longer a back-office function—it is now a fundamental lever for protecting the bottom line.

Billing and Transparency Concerns

Retail & hospitality firms report a level of financial unpredictability that is the highest of any sector surveyed, driven by a combination of unclear billing, surprise charges, and late invoices.

• Bill Transparency: Only 60% of retail & hospitality buyers understand the makeup of their bills—a 15-point deficit compared to the survey average.
• Hidden Costs: 68% of firms feel blindsided by surprise charges, compared to a 60% across all businesses.
• Forecasting Failure: 58% of the sector suffers from late billing, removing the lead time required for accurate financial modelling.

 

This lack of clarity is often rooted in the complexity of industrial and commercial (I&C) billing. These invoices are made up of multiple levies and charges that can take over a year to fully settle. Only 70% of retail & hospitality buyers feel their bill charges are clearly explained—a 10-point gap behind the rest of the market. For a Finance Director managing a diverse portfolio, tracking these evolving costs across a stream of overwritten statements is an administrative nightmare.

When budgets bear little relation to reality and invoices arrive too late to be audited, energy stops being a simple utility and becomes a source of systemic financial instability.

Non-Commodity Pressures

The sector is now bracing for a significant escalation in non-commodity expenses. Starting in April 2026, the National Energy System Operator (NESO) will introduce substantial price hikes for Transmission Network Use of System (TNUoS) charges. While these reforms are necessary to fund vital grid upgrades for the renewable transition, the financial impact is severe:

• Forecasted Hikes: Modelling suggests increases of 60-90% over the next few years, potentially reaching millions of pounds in additional fees for major consumers.
• Budget Readiness: Only 30% of retail & hospitality organisations have specifically budgeted for these new network charges.
• Planning Gap: A further 13% are aware the changes are coming but have yet to include them in their financial plans.

Despite the scale of these increases, a communication gap remains. Many businesses report they have not received clear information from suppliers, leaving them little time to adjust financial strategies.

Restricted Operational Leeway

Retailers currently feel disadvantaged compared to other large energy users. The data shows a significant gap in how retail & hospitality firms use operational levers to manage costs:

• Flexibility Gap: Only 53% of retail & hospitality businesses use demand shifting, compared to 73% of the wider market—a 20-point deficit.
• Asset Reliance: Retail & hospitality firms are 10% less likely to rely on on-site generation or storage to manage costs (64% vs. 74% overall).

These gaps are a result of the reality on the ground. A factory can pause a production line when energy prices spike, but a retailer cannot turn away customers. Between fixed trading hours and seasonal rushes like Christmas, there is very little room for manoeuvre. With so little leeway, it is no wonder energy managers in the sector feel stuck.

The Internal Hurdle

The results suggest that internal fragmentation is as much a concern as external volatility. Many energy managers within retail & hospitality report a sense of isolation, finding it difficult to align approaches across departments:

• Buy-in Barriers: Only 62% of energy managers in the retail sector feel confident getting senior-level buy-in.
• Siloed Risk: Only 70% believe energy risk is shared effectively across Finance, Procurement, and Ops, compared to 80% in other sectors.

 

When energy is treated as a facilities concern rather than a cross-functional risk, inefficiencies go unnoticed. In an increasingly volatile market, those businesses that adopt a unified approach will be best placed to manage risk and protect their bottom line.

Building Retail Resilience

The 66% risk of inaction identified by the SQE results serves as an ultimatum for the British retail community. For a sector used to operating with thin margins, the data points toward three necessary shifts to enhance financial resilience against both market price swings and rising non-commodity costs:

1. Fixing Bill Transparency: Move beyond the obscurity of legacy billing to ensure energy data is audit-ready and accurate.
2. Closing the Flexibility Gap: Overcome the 20-point gap in demand-side flexibility through better reporting and site-level insights.
3. Unifying Internal Strategy: Integrate energy risk into the core business strategy, ensuring Finance, Ops, and Procurement no longer operate in isolation.

The data confirms that for the retail sector, the predictability of the "utility bill" is a thing of the past. Future resilience depends on closing the gap between current supply arrangements and the reality of a market where network charges and non-commodity levies are increasingly dominant.

SQE

SQE (formerly Squeaky Energy) is a modern energy supplier, built exclusively for industrial and commercial businesses. We use technology to make buying, managing and optimising business energy work properly.

While these findings focus on the retail and hospitality sector, the challenges of transparency and control extend across the entire I&C landscape. You can read our full analysis of cross-sector trends here.

If you would like to discuss how we can help your business address these challenges—from audit-ready billing to navigating upcoming network charges—book a call with our team.