Retail has rarely been as tough, says Tesco chief: Grocer battered by rising costs and red tape
Tesco's boss has warned retail has ‘rarely been as tough’ as it is battered by rising costs and red tape at home and crises overseas.
Speaking at the World Retail Congress, Ken Murphy pointed to mounting pressures from rising energy and labour costs, as well as increased regulation – including in the UK.
The Labour Government has heaped billions of extra costs on to retailers, triggering warnings of shop closures and job losses.
Chancellor Rachel Reeves has imposed a £25billion increase in National Insurance and an inflation-busting hike in the minimum wage as well as higher business rates.
‘Things have rarely been as tough for retail as they are today,’ said Murphy.
‘As we absorb the rising cost of energy, labour and regulation, retailers have to find new ways to keep growing in this context, because if we don’t, it won’t be just us that pays the price, but the families, businesses and communities that depend on us.’
Rising costs: Tesco boss Ken Murphy pointed to mounting pressures from rising energy and labour costs, as well as increased regulation, including in the UK
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Looking further afield, Murphy noted supply chain disruptions caused by military conflict, trade wars and the climate crisis. He warned: ‘There is geopolitical instability from the Ukraine to the Red Sea, which will continue to disrupt our supply chains and markets.’
Retailers are also facing uncertainty as Donald Trump’s trade war upends supply chains, he said.
And there is the fallout of a ‘very real climate emergency’, Murphy said, adding: ‘During the first four months of this year alone, we’ve seen several droughts, flash floods in southern Europe and wildfires that have ravaged California’s vines and orangeries.’
Farmers in its supply chain are ‘under unprecedented strain’, he added.
Underscoring the importance of the High Street, Murphy told delegates in London that Tesco was the UK’s biggest private employer and the country’s third-largest corporate taxpayer.
The store said its National Insurance bill will be £235million higher this year as a result of the hike.
The supermarket announced in January that it was cutting 400 jobs and last month Murphy refused to rule out further losses.
And Tesco is anticipating taking a £400million hit to profits this year as the competition among grocers intensifies.
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