London's Link and Lace

The retailer says Britain is performing better than expected, Europe escapes the increase, and the Strait of Hormuz explains the rest

The cost of a cardigan is not usually a matter of foreign policy, but in 2026 it has become one. Next, the British fashion and home retailer, said it will raise prices by up to 8 percent in some markets outside Europe from May. RetailDetail’s report of 8 May 2026 gives the reason as the war in Iran: higher fuel costs and supply chain disruption, with the Strait of Hormuz still largely closed. The headline is deliberately specific. Europe, in the report’s subheading, escapes unscathed. The article does not say that British prices are rising, and anyone reading it as a warning about UK shelves should read it again.

The Cost of the Conflict

The more useful number is the cost. Next expects 47 million pounds, about 55 million euros, in additional costs this year from the conflict between the United States, Israel and Iran. That is up from an earlier estimate of 15 million pounds, which covered only the first three months of the conflict, a period the report dates from late February. The rise tells you how the retailer’s view of the problem has changed. What began as a short disruption has become something the company is budgeting around.

It is worth being plain about what a company number like this means. Forty-seven million pounds is an estimate of extra freight, fuel and logistics expense, and not a prediction of what a shopper will pay. Retailers can absorb cost, pass it on, or change what they buy, and the details vary by market. The decision to raise prices only outside Europe suggests that Next sees its European and home customers as more sensitive, or its costs there as more controllable. The report does not explain which, and it would be unfair to guess.

Britain Holds Up

The one cheerful line is that Next is performing better than expected in its home market of the UK. That is a useful reminder that a high street story is rarely one story. A retailer that sells online, to customers who value convenience and a trusted size chart, can do well in a year in which other shops struggle. Our look at the state of the London high street has made the opposite point for years: the street itself keeps changing shape, and its occupants matter more than its name.

Tourists Are Part of the Bill

The war reaches London retail by a second route, which has nothing to do with freight: visitors. In its annual results, Burberry reported that its EMEIA region was flat for the year and down 2 percent in the fourth quarter, with softer tourism linked to Middle East tensions weighing on results. The company said the region accounts for about 2 percent of sales, so the effect on Burberry’s total was small. But for a London shop that relies on international visitors to fill the till, the same tension can have a larger effect, because tourism is a bigger share of the customer base.

This is the kind of linkage that rarely appears in a shop window. A price rise at a retailer in one market, a quieter quarter for a luxury brand in another and a rising freight bill for a third all share a single cause. The shopper in Knightsbridge or Oxford Street sees none of it, and simply notices that something costs a bit more or that the street feels a little emptier.

The Department Store View

Department stores are built to absorb a shock of this kind, which is part of their charm. Our guide to London’s grand palaces of shopping describes how large stores spread risk across floors, categories and customers, so that a bad month in one department is cushioned by a good one in another. Selfridges is the best-known example, and our account of the department store that throws parties shows how it keeps people coming through the door with events as much as with goods. That strategy is more valuable when freight prices are rising, because an event costs little compared with the stock it sells.

What Shoppers Can Do

For an ordinary shopper in London, the practical advice is unglamorous. Check whether the price rise applies in your market before reacting to it. Compare the cost of a product across retailers before you buy rather than after. Look at how long the item is expected to last, because a more durable coat is a cheaper coat over time. And remember that retailers who plan carefully usually raise prices in stages, which gives you time to buy.

The business reader has other questions. How long does the Strait of Hormuz stay largely closed? Do the extra costs that Next has pencilled in for this year grow again? Does the company extend the price rise to other markets? The answers will arrive in the next results announcement, and it would be premature to guess them here.

The Larger Pattern

Two of the stories in this issue point the same way. Burberry says its strategy is working, and its margins support it. Next says Britain is doing better than expected, and its warning about costs sits beside that. Both companies are describing a market in which the customer is still shopping, and the costs of getting goods to the customer are rising. That is a fine line for a retailer to walk, and it explains why so many are choosing to raise prices in some places and hold them in others.

It also explains why the high street’s old rule of thumb, that cheaper is always better, is under pressure. A shopper who sees an 8 percent rise abroad and a steady price at home has a reason to feel grateful, and a reason to wonder how long it lasts. The next set of company results will tell.

For more on the money side of London shopping, read our business and financial coverage, and for the wider magazine visit Bohiney Magazine. When the news is all freight and fuel, The Daily Mash is the sort of place that reminds you the price of a pint is also under review. Until the shipping lane reopens, the best advice is to keep your receipts and your sense of proportion.

SOURCE: bohiney.com