Supermarket competition and consumer gloom hits region’s food and leisure sectors

THE relentless competition between the major supermarkets and cautious consumer habits have hit the region’s hotel, travel and leisure industries, along with its food and drink producers.

The industry is a “marked increase” in business distress, the latest figures from insolvency firm Begbies Traynor reveal.

According to Begbies Traynor’s Red Flag Alert research for Q1 2016, which monitors the financial health of UK companies, while business distress across all sectors in the region had risen by 20% in Q1 of this year, compared with the same three months last year (the same increase in distress as for the UK as a whole), for some industries there has been a more dramatic surge in financial problems over the last 12 months.

Yorkshire’s sport and health sector saw a 48% rise in distress, with 319 companies experiencing ‘significant’ financial problems, compared with 215 in Q1 2016. Travel and tourism also showed an increase, with a hike of 24% in distress (affecting 192 companies in Q1 2016, compared to 155 in Q1 2015).

Bars and restaurants across the region were also more badly affected by distress and the sector saw 1,186 businesses struggling to make ends meet, compared to 940 in the first three months of 2015: a 26% increase year on year.

Meanwhile, the clash between the major supermarkets continues to push the region’s food and drink producers to the limit. In Yorkshire 158 food and drink businesses were showing signs of financial distress in Q1, up by 29 (22%) on the same three months in 2015.

The high concentration of food and drink producers in Yorkshire leaves the region particularly vulnerable to the actions of the major supermarkets, said the report. Across the UK as a whole, the food and drink sector has seen a 29% hike in distress levels, with 1,820 companies affected, up from 1,414 in Q1 last year.

Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: “Aggressive pricing by the supermarkets and tighter control over costs continues to take its toll on our small food and drink producers, many of whom have been ill prepared for the lengthy war of attrition that they find themselves caught up in.”

He added: “Consumer spending on leisure is also on a downward trajectory as economic uncertainty and rising property prices dampen the enthusiasm for spending on sports and leisure activities. Unfortunately this looks set to continue as with the EU referendum still a couple of months away and the possible disruption of a Brexit looming large.”