The number of UK retailers on the brink of collapse rose by a quarter in the last three months of this year, according to a report, due to a combination of rising business costs and weak consumer confidence.
Insolvency expert Begbie Traynor said the number of retailers in “severe” financial distress increased by 25% to 2,124 in the fourth quarter compared to the third quarter.
The general retail sector is under the most pressure, with the number of companies in serious financial distress increasing by 29% quarter on quarter, to 1,457 from 1,127 in the third quarter.
In the food and drug retail sector, the number of companies at risk of bankruptcy rose from 569 in the third quarter to 667 by the end of the 11th week of the final quarter of this year, with a quarter-on-quarter increase of 17.2%.
The report found a total of 28,747 retailers across the UK were in “significant” distress, down from 34,494 in the same period last year.
Julie Palmer, partner at Begbies Traynor, said: “While this year has highlighted the resilience and adaptability of some UK retailers, the sector remains under significant strain. “Clearly, some retailers are finding ways to effectively deal with the financial pressures, while others, especially regular retailers, are struggling under the weight of rising operating costs and pressure on consumer spending. I am suffering from
Fewer consumers hit the high street or shopping centers this year to take advantage of Boxing Day sales.
Overall footfall in UK retail stores was down 4.9% on Thursday compared to a year earlier, according to data from MRI Software.
High street destinations saw the biggest decline in shoppers, with a 6.2% year-on-year drop. Foot traffic to shopping centers was down 4.2% compared to Boxing Day last year, but retail parks fared slightly better, down 2.9% year-on-year.
Many shoppers focused on pre-Christmas shopping, with foot traffic on Christmas Eve increasing 18% compared to last year.
Shares in some British retailers fell on Friday as traders digested a drop in Boxing Day foot traffic.
Shares in clothing and home goods retailer Next fell 1.7% on Friday, making it the biggest decliner in the FTSE 100.
Meanwhile, online electronics retailer AO World was one of the biggest decliners in the FTSE 250 index, falling more than 3%.
Last year, Boxing Day attendances increased by 4% compared to 2022, driven by a boom in high street shopping which increased by 8.6% year-on-year.
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Many retailers under pressure launched Boxing Day sales earlier this year, giving shoppers the chance to snag bargains online without having to go to a store.
MRI Software's Consumer Pulse report found that 53% of shoppers plan to complete at least half of their Christmas shopping online.
Andy Sumpter, retail consultant at Sensormatic Solutions, said: “After a weak start in December, retailers have been trying to bounce back since then with the important Christmas shopping season.” “And this tailgating effect has seen many businesses launch Boxing Day sales much earlier than usual in an effort to boost pre-Christmas revenue, with some retailers offering discounts traditionally held on Boxing Day. We even offered it as early as mid-December.”
MRI Software expects retail footfall to increase from Friday as many major retailers, including John Lewis, Marks & Spencer, Next and Aldi, reopen.
Despite a quarterly increase in the number of retailers on the verge of collapse, the number of UK retailers in serious distress has fallen slightly on an annual basis from 2,142 in the fourth quarter of last year. There is.
Mr Palmer said insolvency levels were expected to “rise” next year as measures announced in the autumn budget, including plans to raise national insurance contributions for employers, increasing the minimum wage and adjusting capital gains tax, affected businesses. ” is expected.
“Even for the more resilient businesses, the pressures remain unrelenting and many businesses are likely to face financial challenges next year as they navigate increasingly complex challenges,” Palmer said. Ta. “Weaker businesses will find little joy as we enter a new year amid mounting challenges.”
