BRC - Bank of England Directors' Roundtable: 29th September 2026

Retail CFOs meet the Bank of England

The BRC recently brought together around nine chief financial officers from retailers across food, clothing, home furnishings and specialist high street retail to meet the Bank of England. The discussion covered current trading, cost pressures, the inflation outlook and how retailers are adapting.

The BRC's view

• Retail sales have been resilient, growing around 3% on a year ago.
• Consumer sentiment remains fragile, and the retail labour market is weak.

The Bank's view

• The Bank highlighted geopolitical headwinds.
• Inflation had been expected to ease but is now expected to come in higher.

Key themes from retailers

• Inflation is cost-driven, not demand-driven. Retailers pointed to higher employment costs (employer NICs and the National Living Wage), packaging levies, business rates, logistics and fuel. Consumers have little capacity to absorb further price rises.
• Doing more with less. Retailers are reducing headcount relative to sales and investing more in automation, because higher labour costs make the payback much stronger. AI is increasingly used to drive efficiency, including in writing software.
• A cautious, value-seeking consumer. Members reported trading down, strong promotional activity, heavy use of coupons and fierce competition on loyalty schemes. Lower-income households are under the most pressure.
• Margins are being squeezed as retailers absorb costs and discount to protect volumes.

Food

• Volumes are broadly flat, in line with official data. The demand outlook is okay but weaker.
• Food inflation is expected to pick up as costs pass through, reaching around 3–6% by spring. Retailers do not expect a return to double digits.
• Fertiliser supply held up after this year's conflict involving Iran, helped by longer-term contracts.
• Structural changes are also at play. Take-up of GLP-1 weight-loss medication, which affects whole-household shopping, was estimated at around 12% and expected to rise.

Clothing and footwear

• US tariffs have caused significant disruption. The UK–India trade agreement was described as immensely helpful.
• Price inflation has been more muted than the 6% some had expected. Retailers see little room to raise prices without hurting volumes.
• The late-November Budget was badly timed for Black Friday, which was already highly competitive and discount-heavy. Poor weather has also weighed on trading.
• Shopping habits are changing. Retailers mentioned the growth of marketplaces, a greater focus on convenience, more casual dressing for special occasions and a rapidly growing pre-loved market.
• Rents have bottomed out, but store profitability has declined. Currency movements have helped offset some cost increases. International visitors have provided a buffer for London-focused trade when domestic demand is weak.

Home furnishings

• This category is the most exposed to interest rates. Volumes are contracting, and demand is the biggest challenge.
• Online is growing faster than stores. Retailers are sharing store space with other brands to drive footfall and cross-visits.
• Business rates are a major concern for large-format stores.
• Efficiency efforts focus on click and collect, how staff are organised, and trials of in-store robotics and self-checkouts. AI has not yet had a significant impact.

Specialist high street retail

• Smaller-format retailers that depend on high streets said footfall and demand are their biggest issues, with their core customers heavily squeezed.
• Some are hedging energy and other costs for at least the next year.