A BELOVED furniture chain “on the brink of collapse” has been forced to make a “regrettable” move to safeguard its future.
The decision by Sterling Furniture Group, which has numerous stores across Scotland, was made due to upcoming tax hikes announced at the recent budget, bosses have claimed.
These include an increase to employer national insurance contributions – set to kick in this April.
In a blow to its 400 staff, the company confirmed that jobs would be cut to manage costs amid the hikes.
It is not clear exactly how many will be let go.
Workers are currently spread over seven Furniture Home stores – located in Tillicoultry, Glasgow, Aberdeen, Edinburgh, Dunferline and Uddington, Dundee – as well as Anderson & England in Elgin and Buick Furniture in Montrose.
Stores run by the group sells a variety of homeware and furniture, from sofas to flooring and accessories.
A spokesperson for the group also referenced mysterious “restructuring” plans.
They said: “In response to challenges in the evolving retail landscape, including the additional tax burden announced in the recent budget, we have been forced to take difficult decisions to safeguard the future of the company.
“Regrettably, after conducting a comprehensive review of our operations and staffing levels, we have determined that restructuring and redundancies are necessary to ensure our long-term viability and success.
“The wellbeing of the affected staff is our main priority, and we fully acknowledge the impact these redundancies will have.”
No stores will be closing, however, and no sales staff will be affected, the Sun understands.
It is far from the only company planning job cuts to stave off financial ruin.
At the Budget in October, Chancellor Rachel Reeves also announced another rise in the minimum wage – putting further pressure on employers.
Analysis by the Chartered Institute of Personnel and Development on more than 2,000 firms found a “sharp increase in redundancy intentions” since the Budget.
Chief executive Peter Cheese warned: “These are the most significant downward changes in employer sentiment we’ve seen in the last ten years, outside of the pandemic.
“Employer confidence has been impacted by planned changes to employment costs, and employment indicators are heading in the wrong direction.
“Businesses have had time to digest these impending changes, with many now planning to reduce headcount, raise prices and cut investment in workforce training.”
Nicholas Hyett, investment manager at Wealth Club, added that further job cuts could result in rampant unemployment.
He said: “While a sudden flurry of job losses could take some heat out of the labour market – reducing inflation – the danger is that it leads to a spike in unemployment which impacts growth and the tax take, putting the government’s slim fiscal margins under yet more pressure.
“The government will be watching the next few months’ numbers through their fingers.”
Last month, supermarket giant Morrisons said it was cutting 200 staff, with boss Rami Baitiéh citing an “avalanche of costs” following the Budget.
Why are retailers closing stores?
Retailers have been feeling the squeeze since the pandemic, while shoppers are cutting back on spending due to the soaring cost of living crisis.
High energy costs and a move to shopping online after the pandemic are also taking a toll, and many high street shops have struggled to keep going.
However, additional costs have added further pain to an already struggling sector.
The British Retail Consortium has predicted that the Treasury’s hike to employer NICs from April will cost the retail sector £2.3billion.
At the same time, the minimum wage will rise to £12.21 an hour from April, and the minimum wage for people aged 18-20 will rise to £10 an hour, an increase of £1.40.
The Centre for Retail Research (CRR) has also warned that around 17,350 retail sites are expected to shut down this year.
It comes on the back of a tough 2024 when 13,000 shops closed their doors for good, already a 28% increase on the previous year.
Professor Joshua Bamfield, director of the CRR said: “The results for 2024 show that although the outcomes for store closures overall were not as poor as in either 2020 or 2022, they are still disconcerting, with worse set to come in 2025.”
It comes after almost 170,000 retail workers lost their jobs in 2024.
End-of-year figures compiled by the Centre for Retail Research showed the number of job losses spiked amid the collapse of major chains such as Homebase and Ted Baker.
It said its latest analysis showed that a total of 169,395 retail jobs were lost in the 2024 calendar year to date.
This was up 49,990 – an increase of 41.9% – compared with 2023.
It is the highest annual reading since more than 200,000 jobs were lost in 2020 in the aftermath of the COVID-19 pandemic, which forced retailers to shut their stores during lockdowns.
The centre said 38 major retailers went into administration in 2024, including household names such as Lloyds Pharmacy, Homebase, The Body Shop, Carpetright and Ted Baker.
Around a third of all retail job losses in 2024, 33% or 55,914 in total, resulted from administrations.
Experts have said small high street shops could face a particularly challenging 2025 because of Budget tax and wage changes.
Professor Bamfield has warned of a bleak outlook for 2025, predicting that as many as 202,000 jobs could be lost in the sector.
“By increasing both the costs of running stores and the costs on each consumer’s household it is highly likely that we will see retail job losses eclipse the height of the pandemic in 2020.”
