The £276m profit opportunity fashion retailers are overlooking

For years, fashion retailers have relied on familiar growth levers: new product, sharper pricing, improved customer experience and omnichannel investment. But as sales growth slows and margins remain under pressure, attention is shifting from driving revenue to improving operational performance.

With UK clothing and footwear sales forecast to grow by just 2.3% in 2026, and a third of apparel retailers identifying profitability as their primary priority for the year ahead, many retailers are asking a different question: not how to sell more stock, but how to operate more efficiently.

One of the biggest opportunities may lie in an area that rarely reaches the boardroom agenda; goods not for resale (GNFR).

From packaging and point-of-sale materials to store consumables, office supplies and IT equipment, these everyday purchases are essential to retail operations, yet procurement has often remained fragmented and poorly managed.

Research by CCS McLays, in partnership with Retail Economics, estimates UK fashion retailers spent £3.9bn on GNFR in 2025. The study suggests that retail leaders felt adopting a more strategic approach to managing this spend could reduce costs by an average of 7%, equivalent to £276m across the sector. Achieving the same profit improvement through sales alone would require almost £5.9bn in additional revenue.

As Retail Economics chief executive Richard Lim puts it: “When sales growth is flat, the battleground for profitability shifts to the cost base. Procurement has quietly become one of the least visible drags on margin in fashion retail.”

The challenge is that indirect spend becomes increasingly complex as retailers grow. Supplier bases expand, purchasing responsibilities become dispersed across stores, distribution centres and head offices, and visibility often declines. Without clear ownership and robust data, inefficiencies become embedded in day-to-day operations. The research suggests this is particularly true for mid-sized retailers, where operational complexity often outpaces procurement maturity.

While larger businesses have typically invested in supplier consolidation, governance and spend visibility, growing retailers can find themselves caught between increasing complexity and limited internal resources.

Those pressures are only intensifying. Packaging inflation, higher labour costs and the continued rise in global freight and logistics are all increasing the cost to serve customers. For CCS McLays chief executive Ian Hall, procurement maturity is becoming a genuine competitive advantage.

“There’s a clear performance gap between retailers with structured procurement practices and those relying on fragmented, reactive processes. Higher maturity correlates with lower GNFR costs and greater resilience.”

As growth becomes harder to find, operational excellence is emerging as one of the few competitive advantages retailers can still control. Retailers that improve visibility and discipline over indirect spend will be better placed not only to protect margins, but also to free up investment for future growth.

Read CCS McLays report, produced in partnership with Retail Economics, From Blind Spot to Retail Advantage: How GNFR is Reshaping Profitability in UK Fashion Retail.