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Record number of retailers at risk

Record number of retailers at risk, reports insolvency trade body

Almost a quarter of high street retailers in Yorkshire and across the UK are at higher than normal risk of insolvency, according to the insolvency trade body R3.

The January figures show that of the 104,253 physical stores in the UK, 25,133 were at higher than normal risk. The proportion at risk in Yorkshire was the same as the national figure with 24.1% or 1,881 of the total 7,820 high street retailers in the region at higher than normal risk.

Looking at the rest of the UK, of the 12 regions surveyed, the East of England had the highest proportion of physical retailers at risk at 25.4%, while Northern Ireland had the least with 19.3%.

There was also marked volatility among market stalls with 35.4%, or 90 businesses, in Yorkshire deemed to be at risk, higher than the national figure of 33.3%.

The figures from R3 follow the recent ONS report that, in December, there was a 1.9% fall in sales since the previous month across all of the main retail sectors - the biggest monthly decrease for more than four and a half years - with the heaviest falls coming from non-food stores. As expected, consumers bought more online this year, spending about £1bn a week, 21.3% higher than in December 2015.

Adrian Berry, chair of R3 in Yorkshire and restructuring partner at Deloitte LLP, said:

“Interestingly, our figures show that 31.3% of Yorkshire-based online retailers were in the higher risk band, close to the national figure of 30.6%, but this surprisingly high proportion perhaps reflects the fact that many of these non-store retailers are likely to be start-ups and smaller scale businesses.

“Of more concern is the underlying trend that with many high street retailers experiencing relatively poor Christmas trading, a significant number are now deemed to be at higher than normal risk as we head into 2017. While back in the autumn consumers appeared to have brushed off Brexit worries, it seems that the ongoing uncertainty about the complexities of leaving the EU, together with the prospect of rising inflation in the year ahead, may be starting to have an adverse effect on spending.”

Mr Berry continues: “As well as a weak pound and higher staff costs due to the new National Living Wage, the UK’s retailers suffered from a tough 2016 with many being forced to discount amid fierce competition, all of which has put pressure on already tight margins. After seeing thousands of job losses in the retail sector last year, prospects for the year ahead are far from rosy with more high street retailers struggling to survive.”

This was posted in Bdaily's Members' News section by Emma Kilmurray .