As tensions between the USA, Israel, and Iran escalate across the Middle East, British retailers are preparing for further challenges in an already difficult economic climate. Food inflation increased to 4.3% in the four weeks to 22 February, up from 4% in January and 4.7% in December, according to Worldpanel by Numerator. Experts warn that the ongoing instability could drive prices even higher, affecting more than just the grocery sector.
“When tensions rise in the Middle East, energy prices are usually the first thing to move,” said Marty Bauer, retail analyst at Omnisend. “If oil and gas become more expensive, it costs more to transport goods, run warehouses and manufacture products.”
Increasing supply chain costs
As supply chain costs rise, consumers often bear the additional expense. “That extra cost rarely disappears, and most of Britain’s biggest retailers will likely do anything to avoid it impacting their margins, so unfortunately, it tends to be passed down the chain, while making sure to avoid deterring consumers entirely,” Bauer said.
Price rises, Bauer says, are likely to be incremental rather than “one big price jump”. He expects the fragrance and luxury chocolate sectors – which source many of their ingredients from the Middle East – to be particularly impacted. “Consumers can undoubtedly survive without many of these items, but we may also see fashion, electronics and homeware affected if freight costs increase or delivery times lengthen. Many UK ecommerce brands rely on global supply routes that pass through or near the region,” he said.
With uncertainty rising, retailers may need to take precautionary steps of their own. Reviewing exposure to vulnerable shipping routes and identifying alternative suppliers can help reduce risk if delivery times extend or costs surge. Some may also look to build modest inventory buffers for critical lines to avoid stockouts should delays become more frequent.
Inflation is the biggest risk
The biggest risk for both retailers and consumers, however, is increased inflation. “If higher energy prices feed into household bills, shoppers tend to rein in non‑essential spending. That often means more comparison shopping, switching to own‑brand alternatives and waiting for promotions before buying,” Bauer said.
For consumers, that means belt‑tightening – and for retailers, that means tighter margins. “If disruption continues, ecommerce brands may need to focus less on aggressive discounting and more on value messaging, loyalty and flexibility,” Bauer said. “When consumers feel pressure on their finances, trust and transparency matter more than ever.”
Clear, proactive communication will also be critical, as Bauer points out: “When costs are rising and delivery times are less predictable, being upfront about pricing and stock levels helps protect trust. In uncertain times, shoppers are quick to notice inconsistency.”
Payments disputes are more likely
Monica Eaton, founder and CEO of Chargebacks911 and Fi911, has warned that global travel disruption may trigger wider payment dispute risk. “With thousands of flights cancelled and schedules shifting across key global routes, the industry is now entering the stage where payment disputes typically begin to rise,” she said. “When disruption hits at this scale, the impact rarely stays contained to airlines. Conferences, corporate travel and large events can also face postponements or cancellations, which creates more complex refund pressure across the wider payments ecosystem.”
Eaton says that consumer financial sensitivity typically increases during such times, exposing retailers to chargeback risk. Strengthening internal refund processes — including faster resolutions and clearer policies — can help reduce unnecessary disputes. “If customers feel financially exposed and cannot get clear answers or timely refunds, many will go straight to their bank. What begins as a service issue can quickly turn into a chargeback,” she said.
While the scale of disruption will depend on how long the instability continues, it’s clear that UK retailers face risks on multiple fronts — rising operational costs, potential supply bottlenecks and heightened chargeback exposure as financially stretched shoppers become more sensitive to delays and uncertainty. Retailers that focus on diversifying supply chains, communicating clearly with customers and strengthening their refund and dispute‑handling processes will be best positioned to maintain trust and protect margins in an increasingly volatile environment.
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