UK high street woes continue, with 43,000 retailers report “significant” financial distress
According to insolvency specialist Begbies Traynor research, the number of firms experiencing “significant” financial distress at the end of March rose by 21% year-on-year, representing 10,000 more businesses.
General retailers were the hardest hit of these with those reporting distress rising 25% to 30,668 as discretionary spending hit its lowest level since 2012.
Food and drug retailers are less dependent on consumer spending in general and weather conditions for sales, also saw numbers reporting distress up 11% to 12,290 over the last 12 months.
“Almost weekly we hear news of another major retailer that is struggling – from the recent administrations of Maplin and Toy ’R’ Us, to Carpetright’s closure of a quarter of its stores and the recent CVAs of New Look and Select – indicating that even the most established brands are failing to entice customers through their doors,” Begbies Traynor partner Julie Palmer said.
With competition on the high street fiercer than ever and sales volumes expected to be flat at best this year, those retailers with sophisticated delivery options and a strong multi channel offering are likely to come out on top.
Businesses that are still playing catch-up on the technology front, or have failed in growing their customer base or invest in modernizing legacy systems are only going to lag further.
However, there is a glimmer of hope on the horizon for the UK’s consumer-facing industries who weathered storm thus far. Lower unemployment and real wage growth finally returning with inflation falling back, we should hopefully see households start spending again as the weather improves.