It’s common knowledge that the UK retail sector is in distress. Profits are falling while consumers aren’t spending and online operators are storming ahead. One of the biggest causes has been the issue of business rates.
According to research conducted by The Daily Telegraph, while higher wages, increasing costs and a decline in consumer confidence have caused retailers distress, the real pressure has come from business rates. They have accelerated the rate of store closures and forced business owners to sacrifice expansion and investment just to stay afloat.
Rates have increased gradually over the years and been long accused of hitting small businesses the hardest. Large retail chains have not escaped the pressure, however, with more than 23,400 jobs put at risk in the last year. Retail giants including Mothercare, Marks & Spencer and House of Fraser have been forced to shut branches.
Whether the business is small, large, offline or online, pressure from business expenses can be damaging. This does not have to become ruinous, however, and business finances can- and will- be improved.
Astute credit managers have been wary of retail sectors for some time. Insolvency and the ceasing of trade can happen quickly, so it is important to act promptly at the first sign of distress.