Selfridges, the iconic British department store chain, is set to make redundancies amid the ongoing struggles faced by the UK's retail sector.

The decision to eliminate around 70 roles comes as a direct consequence of the government's abolition of tax-free shopping for international tourists and a broader decline in luxury spending due to economic uncertainties, the company said.

Andrew Keith, the Chief Executive Officer of Selfridges, revealed that the new round of redundancies was necessitated by the government's controversial move to discontinue the tax-free shopping scheme, which had previously been a significant draw for wealthy international visitors.

According to The Times, the decision has dealt a severe blow to the luxury retailer, which relies heavily on purchases and footfall from affluent global tourists.

The job cuts, announced just nine months after Selfridges' previous round of redundancies, are expected to primarily impact head office departments, while shop floor workers remain unaffected for now. The company emphasised that it hopes to offer redeployment opportunities to some of the affected employees.

The loss of VAT-free shopping for foreign tourists has reportedly weakened sales at Selfridges, contributing to the challenging retail environment in the UK. In its latest financial results, Selfridges Retail reported a 29 per cent increase in sales to £843.7m for the year to 28 January 2023, but pre-tax losses narrowed to £37.9m from £121.5m the prior year.

Selfridges' statement highlighted the significant impact of the continued absence of a tax-free shopping scheme in the UK, stating, "The continued absence of a tax-free shopping scheme in the UK has significantly impacted international sales. Our proposals mean making around a 2 per cent reduction in our overall headcount."

The UK's retail sector has been grappling with a multitude of challenges, including soaring inflation, cost-of-living pressures, and a shift in consumer spending habits.

Earlier this month, Julian Dunkerton, the co-founder and chief executive of Superdry, warned that the decision to not reinstate the tax-free shopping scheme had driven international visitors to opt for shopping in Europe instead of the UK, describing the move as a "self-inflicted wound" for the British retail industry.

As the UK's retail environment continues to face headwinds, Selfridges and other luxury retailers are forced to adapt and streamline operations to navigate the challenging economic landscape.

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