Retailers Need Cash Flow Relief As Brexit Takes Hold

26th March 2018.

The future looks bleak for Britain’s high streets, with retailers having suffered their worst start to any year since 2013 and the likes of Toys R Us and Maplin plunging into administration.

Since the collapse of numerous retailers, and the plummeting profits of an even greater number, the future of British retail is at risk as we go barrelling into Brexit. Our country’s high streets have been having a difficult time, with interest and business rate hikes, high inflation, and Brexit uncertainty. Retail professionals are further struggling with sluggish wage growth and inflationary pressure on household budgets. Last week, clothes retailer New Look, announced it was shutting 60 stores and cutting almost 1000 jobs, and it doesn’t look like this conveyor belt of failed businesses is going to desist. Fellow clothing chain Next has already announced a decided slump in sales and profits, prompting concerns for its future on the high street. While we see moments where sales pick up, the cultural pastime of shopping has transformed, and retailers will have to adapt.

At the Credit Protection Association, we have aided many of our members who own retail businesses. As competition with online retailers becomes fierce, ensuring your business has the financial capability for expansion is essential. By utilising our debt recovery facilities our members have had the funding to grow their business; purchasing technology to appeal to the digital customer or just physically growing the business to make it a larger contender on the high street.

Earlier in the week data from the Office for National Statistics showed that retail sales volumes had picked up by 0.8 percent in February, but forecasters and economists are pessimistic.

Volumes contracted in January, meaning that British retailers this year suffered their worst start to any year since 2013.

Economists Sreekala Kochugovindan and Fabrice Montagne at investment bank Barclays said that despite some relief in February, the rebound was not enough to offset the “Christmas drag”, when consumers largely shunned the high street in favour of the internet.

And HSBC economist Elizabeth Martins dubbed February’s reading “the bounce before the beast”. She warned that figures next month would likely be additionally burdened by adverse weather conditions that disrupted transport links and kept shoppers from leaving their homes during the early part of March.

The fashion industry is predicted to be hit particularly hard. Popular young-adult online retailers such as Asos, Missguided and Boohoo, are increasingly seizing market share from some of the more established players, by tapping into consumers’ desire to buy via their smartphones and online.

The service industry is also exp[ecting a similar rough Spring, with Jamie’s Italian and burger chain Byron having already launched CVAs. On Friday, Prezzo confirmed that it will be shutting 94 of its 300 outlets, putting around 500 jobs on the line. Home delivery websites such as JustEat and Ubereats are also hurting the industry and the cultural indulgence of eating out.

British high streets are getting emptier as consumers get more concerned about their personal finances. Online retailers give them a chance to do the housework while ordering groceries, as well as avoiding the biting cold of an English Winter. While the act of frequenting brick and mortar shops, stores and restaurants, is still enjoyed by some, businesses have to reach the realisation that large numbers do not. By offering consumers the choice of website browsing and window shopping, retailers are guaranteed sales and consumers are guaranteed what they want.

As the dark cloud of Brexit balances over the heads of businesses and consumers, it’s important that any changes are made immediately. Before our trading relationships change or our access to new trends is restricted, businesses should bolster their cash flow and ensure their business finances can survive the harshest economic conditions. At the Credit Protection Association, we provide many of our members with the financial freedom to explore new expansion opportunities. These can range from building a website and hiring graphics professionals to design it, to hiring new offices, and even more staff. Our debt recovery services uncover money that is owed to our members, and whether it’s used for renovations or explorations, we ensure we put our members back on to the street (or into cyber space) in a better position than before.