Pre-Christmas boost for retailers as risk of insolvency plateaus

Store numbers are up and the proportion of local retail businesses at risk of insolvency has plateaued – that’s according to the latest research by insolvency and restructuring body R3.

Although the Christmas period is likely to be tough for retailers, new figures show the region’s retail sector has rallied over the past year.

The September figures, compiled by R3 using Bureau Van Dijk’s Fame database, show a year-on-year increase in the number of bricks and mortar retail stores in the East Midlands – from 8,400 to over 8,700 – as well as a decrease in their elevated risk levels.

42.1 per cent of retail businesses registered a higher than normal risk of insolvency this September, which is one-and-a-half percentage points lower than the statistic for September 2018.

The number of online retail businesses in the region increased from just under 2,800 to over 3,000 during the same period.

R3 Midlands chair Eddie Williams, a partner at Grant Thornton in the East Midlands, said:“This indication of a possible slowdown in heightened insolvency risk gives retailers a glimmer of hope in the run-up to Christmas. Coupled with the growth in the number of retail businesses in the East Midlands in the last twelve months, it would suggest that there is still confidence in the sector.

“We should be in no doubt, however, that a large number of our region’s retailers are still facing strong economic challenges to their success. Their survival has not been helped by the fact that legislation designed to help cut property tax for shops failed to make it through Parliament before it was suspended earlier this month.

“As the highly competitive pre-Christmas trading period begins, it is vital for business owners to monitor company finances carefully and plan for all eventualities. If cash flow becomes a major challenge, professional advice should be taken at the earliest opportunity.”