Hidden Costs, Hidden Opportunity: UK Fashion Retailers Could Reclaim £276 Million by Rethinking Operational Spending
LONDON – In a challenging climate for UK high streets and online fashion outlets, a new analysis points to an overlooked reservoir of potential savings. According to a report from consultancy CCS McLays and research firm Retail Economics, fashion retailers could collectively save £276 million ($377 million) by improving how they manage Goods Not for Resale (GNFR)—the essential but often ignored costs of doing business.
The study, "From blind spot to retail advantage: How GNFR is reshaping profitability in UK fashion retail," argues that a more systematic approach could cut GNFR costs by an average of 7% across the sector. These savings would drop directly to the bottom line, equating to the operating profit generated from a staggering £5.9 billion in additional sales—without opening a single new store or hiring extra staff.
GNFR encompasses everything from packaging and hangers to point-of-sale materials and office supplies—items vital for daily operations but never sold to customers. Despite its scale, GNFR frequently escapes rigorous scrutiny from senior management.
"When revenue growth is hard to come by, controlling operational costs isn't just prudent—it's a survival tactic," said Ian Hall, CEO of CCS McLays. "There's a clear performance gap between retailers with structured procurement and those with reactive processes. Higher maturity in this area correlates directly with stronger resilience."
The report estimates UK fashion retail GNFR spending will hit £3.9 billion in 2025, driven by persistent packaging inflation, wage costs embedded in supplier contracts, and high return rates that increase demand for processing materials. This comes as the sector faces a pincer movement: clothing and footwear sales are forecast to grow by a meagre 2.3% in 2026, leaving little room to offset rising costs through price hikes.
Consequently, one in three apparel retailers now list profitability as a top priority for 2026, with GNFR management seen as one of the few remaining levers to protect margins without compromising customer value.
The Barriers and the Divide
Resistance to change remains a hurdle. Nearly a quarter (24%) of retailers cite insufficient leadership buy-in as the primary barrier, followed by resource constraints (22%) and supplier market structure (21%). The efficiency gap is also pronounced: online-led retailers face GNFR costs two to three percentage points higher than their store-based counterparts, a reflection of e-commerce's variable cost structure.
Perhaps most strikingly, 90% of mid-sized retailers (with turnover between £250m-£500m) describe GNFR as a genuine "blind spot." These firms specifically highlight needs for better data analytics (29%) and stronger leadership accountability (27%).
"Trading updates obsess over merchandise costs, but the real margin pressure often comes from this non-merchandise spending," the report notes. It finds that meaningful progress occurs when executive teams take clear ownership, integrating procurement into core business planning.
Industry Reaction & Commentary
To help retailers assess their position, CCS McLays has launched The Hidden Value Index, a framework evaluating maturity across transparency, efficiency, innovation, and resilience. Over a third (35%) of retail leaders surveyed said they would reinvest any GNFR-derived savings into innovation and transformation initiatives.
Sarah Chen, CFO at a mid-market womenswear chain: "This report validates what our finance team has been arguing for months. We've been so focused on markdowns and shipping costs that the mountain of spending on store supplies and packaging slipped through the cracks. It's not glamorous, but the savings are real."
Michael Thorne, veteran retail analyst: "This is a classic case of management attention deficit. GNFR is the plumbing of retail—ignored until it bursts. In an era of thin margins, ignoring a £3.9bn cost base is commercially negligent. The savvy players have been on this for years."
Anya Petrova, founder of a sustainable apparel startup: "Frankly, it's shocking that this is still news. This isn't just about cost savings; it's about waste reduction and operational intelligence. If you don't have visibility into your GNFR, you have no hope of managing your environmental impact. The industry's continued ignorance here is both wasteful and irresponsible."
David Reeves, Head of Procurement at a major high-street retailer: "The key is moving from a reactive, order-by-order mindset to a strategic partnership model with suppliers. It requires upfront investment in systems and talent, but the payback period can be surprisingly short. This isn't a back-office function anymore; it's a commercial imperative."
The research, conducted in late 2025, surveyed senior professionals from 100 UK clothing and footwear retailers and incorporated proprietary data from Retail Economics and analysis of the sector's top 50 companies.
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