The research, titled "From blind spot to retail advantage: How GNFR is reshaping profitability in UK fashion retail," finds that a more systematic approach to GNFR could reduce related costs by an average of 7% across the sector.
These savings would flow directly to operating profit and are equivalent to the profit generated from £5.9bn in additional sales, without requiring new stores, extra staff, or expanded sales channels.
GNFR refers to products and services necessary for daily retail operations but not sold to customers, such as packaging, consumables, point-of-sale materials, and office supplies.
Despite its importance to store, warehouse, and ecommerce functions, GNFR often receives limited attention from senior management.
The report estimates that GNFR spending in UK fashion retail will reach £3.9bn in 2025, an increase of 2.2% from the previous year. This rise is attributed to ongoing packaging inflation following supply chain disruptions, higher wage costs included in supplier contracts, and persistently high product return rates that drive up demand for consumables and processing materials.
The study comes as the UK fashion sector faces continued financial pressure. With clothing and footwear sales forecast to grow by just 2.3% in 2026, many retailers have little room to offset rising costs through price increases or volume growth.
As a result, one third of apparel retailers are prioritising profitability in 2026, with GNFR seen as one of the few remaining levers to protect margins without impacting customer value.
Barriers to better GNFR cost control include insufficient leadership buy-in, cited by 24% of retailers, resource constraints at 22%, and supplier market structure at 21%.
While trading updates often focus on merchandise costs, the report notes that significant margin pressure actually arises from non-merchandise spending.
The findings highlight differences in GNFR efficiency by retailer size and channel. Online-led retailers face GNFR ratios two to three percentage points higher than store-based peers due to the variable cost structure of ecommerce operations.
Among mid-sized businesses with annual turnover between £250m and £500m, 90% consider GNFR a blind spot.
These companies report particular needs for improved data analytics at 29% and stronger leadership accountability at 27% to manage GNFR effectively.
The report indicates that meaningful progress occurs when executive teams take clear ownership of GNFR management by setting expectations and integrating procurement into business planning. Smaller retailers often lack resources and respond reactively, while larger companies tend to exercise more strategic control over GNFR spending.
More than a third (35%) of the retail leaders surveyed said they would reinvest savings generated from improved GNFR management into innovation and transformation initiatives.
To assist retailers in identifying areas for improvement, CCS McLays has introduced The Hidden Value Index, a framework that assesses maturity across transparency, efficiency, innovation, and resilience.
CCS McLays CEO Ian Hall said: “GNFR maturity is now a commercial differentiator. 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 ratios and stronger resilience.
“When revenue growth is muted, absorbing operating cost inflation becomes much tougher. With limited scope to pass on higher costs to customers, any rise in non-merchandise spend puts further pressure on already thin margins. Even modest improvements in GNFR discipline can unlock real savings, build resilience, and free up investment for transformation. Within just a matter of weeks, retailers can identify ways to optimise consumables that have a marked impact on business performance.”
The research was conducted in late 2025 through surveys of senior procurement, finance, and operations professionals at 100 UK-based clothing and footwear retailers.
It also incorporated proprietary retail sales data from Retail Economics and analysis of financial accounts from the sector’s top 50 companies.
