The British high street has proved to be an unreliable working environment, with low profits driving retailers into restructuring procedures and even insolvency. Low consumer confidence inspired this drop in profits, with sluggish wage growth leaving consumers with a minimum household budget. The lingering Brexit uncertainty has also affected consumers and business owners alike, creating a business landscape that struggles to attain prosperity for either.
Despite growing hopes that the recent bout of warm weather could have a positive effect on retail profits, insolvencies have soared. The research from Creditsafe’s quarterly Watchdog Report revealed that during the second quarter of 2018 saw a total of 416 retail insolvencies, compared to just 261 a year earlier. The sector furthermore experienced a staggering 2464.5 per cent increase in bad debt owed over the last quarter, rising from just £2.1 million to £53.6 million.
With political uncertainty still prominent, and wage growth and consumer confidence still stunted, the atmosphere looks unlikely to improve without significant effort from the retailers themselves.
At the Credit Protection Association, many of our Members work within the retail sector and have approached us for immediate aid. While our debt recovery services provide our Members with financial confidence, we also encourage them to improve their position themselves, advising them to scrutinise both customers and suppliers. Our objective is for our Members to be awarded the ability to pursue expansion opportunities or merely solidify their position on the high street.
Creditsafe chief executive Chris Robertson said: “The growing number of job losses and empty shops right across Britain is a big cause for concern.
Despite the rising number of insolvencies, there was also a 40.3 per cent increase in new companies created to 11,475 during the same period, while supermarkets like Asda, Iceland and Ocado were the saw the fastest growth in their store estates.
“Nevertheless, it’s promising to see the resilience of entrepreneurs in deciding to open up new businesses in the face of uncertain and changing market conditions,” Robertson said.
“It’s this positive attitude that will be needed to see the retail sector through this tough period.”