Many retailers 'on brink of collapse' as they enter new year

Thousands of retailers - particularly smaller ones - face collapse in the new year as a not-so-merry Christmas trading period, tighter than tight margins, high staff costs and a weak pound combine to push them to the brink.

Business recovery firm Begbies Traynor is warning that many retailers, particularly smaller ones, may not survive “much beyond the January sales” following a rough-and-tumble 2016.

Earlier this month, data from the Office for National Statistics suggested retail sales jumped 5.9 per cent in November 2016, buoyed by Black Friday, but the Begbies report suggests this failed to carry through into December.

It says 21,802 retailers are now in “significant” financial distress - a figure six per cent higher than the same time last year - after a weak festive trading period and other cost pressures. 97 per cent of those retailers are SMEs.

Begbies says a combination of lukewarm Christmas sales, heavy and prolonged discounting, a struggling sterling and higher staff costs due to the new National Living Wage present a cocktail of problems for the UK’s retail landscape.

Julie Palmer, a partner at Begbies, said: “Levels of financial distress among retailers are now even higher than last year.

"Small businesses, whose margins and cost bases are already stretched to the limit, are undoubtedly the biggest victims of the increasingly cut-throat UK retail environment, unable to compete on price or provide the convenience that savvy shoppers increasingly demand.”

Barring a last-minute surge in shoppers, Ms Palmer warned that, for many retailers, the future is looking bleak.

"Unfortunately, without a strong end to 2016, I'm afraid many smaller retailers in particular may not survive much beyond the January sales."

Keep an eye on our up-to-date info on retailers in administration.

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