Insolvency risk holds steady for North West retailers
The percentage of North West retailers at higher than normal risk of insolvency has held steady for the past three months, according to the latest research from insolvency trade body R3.
It shows that the number of retail businesses with a physical presence considered at higher than normal risk of insolvency in June remained almost unchanged at 40.4% (40.6% in March).
Despite the problems facing the high street, the number of businesses in this category has also increased by 1.4% during the quarter to more than 15,900.
Meanwhile, among e-commerce businesses in the North West, 34.6% are at higher risk (34.3% in March), and the number of such companies has grown by 1.6% to more than 6,100.
Paul Barber, North West chair of R3 and a partner at Begbies Traynor, said: “The problems facing the retail sector have left some of the best known names on the high street struggling for survival, yet it has not deterred people from setting up.
“New businesses are being started all the time and new concepts are emerging.
“While it may be no surprise that the number of e-commerce firms has risen by over half since two years ago, it is notable that the number of store-based retailers has increased by over 20% during that time and stalls or pop-up businesses by 62%.
“Retail remains an attractive prospect for many entrepreneurs and vacant stores provide new opportunities. In some cases they are trialling their idea online first, or are keeping costs down by selling through pop-up shops.”
The figures show risk scores have remained stable for many specialist retailers, including home furnishings stores of which 42% are now at elevated risk (41.8% in March), clothing stores (36.2% in June/36.6% in March), footwear shops (38% in June/37.6% in March) and car showrooms or motor retailers (38.8% in June, virtually unchanged from 38.7% in March).
Risk scores for stalls-based retail businesses also rose by one percentage point, with 32.6% now at elevated risk (31.6% in March).
Paul Barber added: “While there are signs that the proportion of businesses with an elevated level of insolvency risk is stabilising, given that the end of the quarter is just past when rents are traditionally due, we may expect to see some further fall-out.
“However, even online retailers and pop-ups are not immune to problems.”
The figures are from R3’s latest retail insolvency risk tracker, which is compiled using Bureau van Dijk’s ‘Fame’ database and measures companies’ balances sheets, director track records and other information to work out their likelihood of survival over the next 12 months.
