More retailers in distress says Begbies
DESPITE boosts from Black Friday, Cyber Monday and most recently ‘panic Saturday’, the last three months has been difficult for many retailers, research suggests.
A study from Begbies Traynor, the Manchester-based insolvency firm, has found that nearly 10,000 more retail businesses are in significant financial distress than was the case in 2013.
Research covering October 1 to December 17 reveals that 24,251 retailers are now suffering “Significant” financial problems s, compared with 15,792 businesses at the same stage last year.
Food and clothing retailers were two of the worst hit groups, experiencing increases in ‘Significant’ distress of 70% and 123% respectively.
On a more positive note, over the same period, levels of more severe critical distress decreased slightly by 10% from 150 retailers in Q4 2013 to 135 businesses this quarter, as the last minute shopping rush brought a small number of the UK’s least stable retailers back from the brink of insolvency, Begbies Traynor said.
Partner Francesca Tackie said: “Black Friday was lauded as the biggest day of retail sales this year, but it seems the only real winners were the largest online retailers and big brand high street chains with the biggest discounts and best online offerings, such as Amazon and John Lewis.
“In a bid to compete, the rest of the UK retail industry has been forced to slash prices and profit margins, but unfortunately sales volumes have failed to keep pace as Christmas shoppers across the UK have been particularly thrifty this year, taking advantage of the significant discounts on offer.
“With rates of inflation at a 12-year low, recent significant oil price drops, real incomes improving and confidence growing, consumers’ discretionary spending power should be set to rally. However, the extra spending power hasn’t translated into improved conditions in the retail sector, indicating a ‘new normal’ where consumers will only part with their hard earned cash for significant discounts.”
