Retailers in Britain have been in “significant financial distress” for the last 15 years according to debt recovery data taken from County Court Judgments (CCJs).
Begbies Traynor released their Red Flag Alert quarterly report, gathering figures and analysis on UK businesses. Those in that “significant financial distress” had “sustained or marked deterioration in working capital, contingent liabilities, retained profits and net worth”, featuring debts of up to £5,000. 582,452 businesses in Britain are in this situation, with 35,908 of them (6.16%) being retailers.
Any business with debts that surpass £5,000 is classed as being in “critical financial distress”. Figures noted that there was a 37% year on year rise for companies that were in this situation, taking the number to 1,957 companies. 118 of those were retailers. The second-largest increase in businesses that fit this description came in the form of retailers. There was a 48% year on year rise. This figure came behind bars and restaurants in the hospitality industry (70%) – the most affected industry – but above the construction sector (36%) in third.
Retailers need to adapt
Many industries have suffered as a result of the pandemic, particularly those on the high street, and Julie Palmer – a partner of Begbies Traynor – feels that many retailers will need to readjust to a changing landscape.
She told Drapers: “[Retailers] are facing a fast-changing environment and need to be ready to adapt or could find themselves falling behind.”
Palmer works in the clothing retail industry and, In terms of that sector specifically, she did highlight that recent heat-waves have contributed to a “short-term boost” in sales.
“Hot weather and the holiday season means many shoppers are updating their wardrobes, giving the sector a temporarily sunny disposition and short-term boost.
“However, structural changes to the way we work – we don’t need so much formalwear when many people are working from home in T-shirts and tracksuits – is a bigger issue. Combine that with consumers becoming more aware of sustainability, responsible sources of supply and manufacturing, along with the fashion for pre-worn, means there are long-term challenges for the industry, especially at the cheaper end of the market.”
Get in touch
If you are in are a business owner in retail, or any sector for that matter, and you find yourself in financial distress, do not hesitate to get in touch with our compassionate experts. Call 0800 088 2142.