At the start of this month, the UK’s minimum wage rose again, with hourly pay rising to £12.71 per hour for those over 21, £10.85 for 18-20 year olds and £8.00 for 16-17 year olds. To some extent, this is a positive for the UK. “The rise in the minimum wage is overdue recognition for frontline customer service roles that have been underpaid for years,” said Russell Attwood, CEO of Route 101. “Better pay should help strengthen morale and boost retention.”
However, this latest increase comes as businesses are already under immense pressure from rising costs across the board, with many struggling to stay afloat. And the ongoing crisis in the Middle East looks set to cause even more economic pain, potentially lasting for months or even years. As Attwood points out, many businesses “won’t be able to absorb the increase and will be forced to cut hours, reduce hiring or pass costs onto customers. That pressure is already visible. The hospitality sector saw the equivalent of four net closures a day in the final three months of 2025.”
Abdelkader Keddari, Director Europe & Middle East at Fluent Commerce, agrees that rising costs are already having a real impact for businesses. “Retail hiring plummeted in 2025, with 383,000 fewer retail jobs on offer than in 2015,” he said. “The reality is that this will only get worse as the cost of staff increases, and it won’t end there. Retailers operate on tight margins, and this rise will push them to look more closely at costs across the entire business, not just in stores, but across fulfilment, service and operations.”
So in such a difficult environment, what can organisations do to ease the pain?
Taking advantage of technology
One of the biggest levers organisations can pull in the face of these mounting costs is to take advantage of new technology that can help reduce their expenses. “We’re already seeing major retailers publicly talk about investing in AI and automation to manage rising costs, and this trend is likely to continue,” said Fluent’s Keddari. “AI, when applied effectively, can allow retailers to significantly cut costs in a number of different areas. For example, AI-driven agents can handle high-volume, repetitive service interactions such as ‘Where is my order?’ queries, which often represent a significant share of inbound contacts and carry a direct cost per interaction.”
“That said,” he added, “Whilst many retailers are already investing in front-end AI solutions such as chatbots, back-end inefficiencies are often where the most meaningful cost savings lie. It’s critical that retailers also focus on fulfilment and order management, which are still too often overlooked as cost levers. Poor orchestration leads to split shipments, excess shipping costs, delayed deliveries and unnecessary markdowns. By contrast, strong order management, supported by real-time data and intelligent decisioning, allows retailers to route orders more efficiently, optimise inventory placement and reduce avoidable costs across the fulfilment network.”
Route 101’s Attwood agreed that AI in particular is key. “We’re seeing more customer-facing teams rely on AI to deal with routine queries, guide staff in real-time and take pressure off already stretched operations,” he said. “In the hardest-hit sectors, it’s one of the only ways to maintain service without continually adding cost.”
Support and strategy
However, despite the potential advantages of technology, there is a limit to what businesses can do on their own. Given the scale of the challenges facing the economy, Keddari believes that more support is needed from the government.
“Rising minimum wages are often introduced with the right intent, but without a clear view of the cumulative pressure on the sector and without a wider strategy for support at the same time,” he said. “For example, retailers are looking for practical measures such as business rates reform, investment incentives for technology adoption and clearer frameworks that support Digital Transformation. If governments want to see a more productive, resilient retail sector, then enabling retailers to invest in efficiency, not just absorb cost, will be critical. It also means recognising the pace of change. Retailers are navigating structural shifts in consumer behaviour, fulfilment expectations and global supply chains, all at once. Policy needs to reflect that operational reality.”
In the meantime, Attwood suggested that businesses should make building resilience a key priority. “Economic pressures are unlikely to ease any time soon, so businesses need to stop waiting on improvements and evolve their practices to ensure they have the capacity to absorb ongoing shocks,” he said. “If we’ve learned any lessons from the difficulties of the last 20 years, it’s that innovation is the key to managing rising costs and emerging stronger and more competitive.”
Ultimately it’s clear that the future remains challenging, but advances in technology mean organisations who take action now to adapt will still be able to succeed and grow going forwards.
