Retail & Wholesale

What’s impacting the retail & wholesale sector?

retail store graphic on yellow background

These are tumultuous times for the UK’s retail sector. A shift in consumer spending habits and the rapid growth of online shopping platforms, such as Amazon, has reduced footfall on the high street and placed increased pressure on the operating margins of many SME retailers.

Despite this, UK retail sales totalled £395 billion recently and businesses in the sector are striving to differentiate their offerings by providing an enhanced customer experience, easier access, improved payments and faster delivery.

Plastic Packaging Tax (PPT) for retailers

Should you be registered and filing returns?

With the first quarterly returns under this new regime due for filing on 29 July 2022, have you considered all the relevant questions to determine whether you need to register and potentially pay PPT?

  • How much plastic packaging do I import? Have I exceeded the 10-tonne threshold since 1 April 2022 or am I expecting to exceed this threshold in the next 30 days?
  • Do I import my products into the UK already wrapped and if yes; is the wrapping potentially subject to PPT if it does not have the requisite recycled plastic content?
  • Do I import unfilled plastic packaging and if yes; have I checked that my supplier is compliant with the new PPT regime and paying any PPT liability due?
  • Have I considered whether the plastic packaging I import is covered by any potential exemptions (e.g. transport packaging such as pallet wrap around multiple products whilst in transit to the UK)?
  • Have I documented an assessment of the PPT regime and how it does/does not impact my business?
  • If I am impacted by this new tax should I be making plans to switch to using sufficient recycled materials so that the tax won’t apply going forward?  After all, that is the intention of the new regime to encourage businesses to make these changes.

If you have any queries or for assistance in this area, please contact your usual Menzies contact or Emma McCartney via the profile below:

Supporting the retail and wholesale sector

We advise retail, wholesale and online retailers, as well as sector-dependent clients. We work closely to find solutions to industry issues, utilising our expertise in everything from business strategy and corporate finance, to audit and tax advice.

A pathway to profitable growth for SME retailers

Increased consumer caution, combined with a shift in spending habits and the rapid growth in online shopping through digital platforms such as Amazon, have led to a reduction in high street footfall while increased competition is proving hard to bear for many small and medium-sized retailers, regardless of whether they are operating on or offline, or both.

Supporting international retail businesses

idahoan logo

Idahoan wanted to test the UK market by supplying through the US company to see if their product would be popular with an overseas consumer market. They were introduced to Menzies who applied some BrighterThinking to their situation.

Whether you need an agile format, whilst you are testing the UK market, or wanting to fully expand into the UK, Menzies can provide comprehensive assistance in all areas to ensure nothing is missed.

Key challenges for the retail sector

Supply chain management

Supply chain management is critical for many retailers, particularly those trading in the EU. As well as keeping their supply chain relationships under review, retailers may need to renegotiate contracts to reduce their risk exposure. Inventory control is essential for storebased retailers, due to high property costs, but online retailers also need to meet increasing customer demand for next-day delivery, whilst keeping delivery costs competitive.

Tax changes

The investment required in technology and fit-outs can be a strain on cash flow but in some instances, such investments may be eligible for R&D tax relief or other reliefs. Taking advantage of such tax reliefs can help to minimise cash flow disruption and reduce tax liabilities. Determining the correct VAT treatment can also be a challenge, particularly where businesses are buying and selling goods overseas, or making online sales.


Operating margins for many high-street retailers have been hit by falling sales and rising costs, such as the higher cost of labour and imported goods.

Growing consumer caution is also impacting sales, putting further pressure on profits.

To optimise profitability, on and offline retailers need to know where their profit potential exists and where it will come from in the future. They should also be prepared to restructure their business model to improve their long-term profitability.

Human resources

With 2.8 million employees, retail is the UK’s largest private sector employer. Recent increases in the National Living Wage, combined with the cost of pensions auto-enrolment, have pushed up labour costs, impacting operating margins.

The sector’s high dependency on low-skilled EU workers also means there is a prospect of labour shortages in the future and this could increase costs further


Digital technology is an increasingly important means of differentiating and personalising the consumer shopping experience. As well as investing in greater use of mobile Point-of-Sale devices, many retail businesses are introducing advanced technologies such as Augmented Reality and other sophisticated technologies to improve flow and personalise their proposition. For bricks and mortar retailers and etailers alike, improved data analytics can improve business decision making and enhance profitability.

More Retail & Wholesale Brighter Thinking

Contact Menzies Retail Sector team

    Service head

    Sarah Hallam - FCCA


    Sarah Hallam is a Partner with a wealth of audit and compliance experience. Sarah is also the Head of our Retail sector team.