Business development · 22 December 2016

Weak Christmas trading leaves thousands of retailers in peril  

sales
Some 97 per cent of retailers in significant financial distress in December were small businesses

More than 20,000 small UK retailers could be facing closure after weak Christmas trading, as levels of “significant financial distress” amongst firms in the sector have peaked in December.

According to the latest retail sector data from business recovery practice Begbies Traynor, an especially weak Christmas trading period this year has forced thousands of business owners to slash prices, to attract last minute shoppers and increase footfall.

This is in advance of the next quarterly rent day in the UK, which will require many retailers to settle outstanding rent debts in January 2017.

The number of retail firms experiencing significant financial distress this December has increased by 6 per cent year-on-year compared with 2015, with small businesses bearing the brunt of the sector’s weak Christmas trading period.

Of the 21,802 UK retailers currently in a state of significant financial distress, Begbies Traynor found that 97 per cent were small businesses, highlighting the specific challenges faced by small, independent and local retailers which cannot match larger competitors.

Commenting on the statistics, partner and retail expert at Begbies Traynor, Julie Palmer, warmed that without a strong end to the year in terms of sales, many independent retailers would struggle to survive beyond January.

“With quarterly rent day just around the corner, retailers across the country will be pinning all their hopes on a last minute sales surge from shoppers who have left it too late for online deliveries, to help tip them over into the black,” she added.

A recent report from the Office of National Statistics (ONS) showed that UK retail sales grew in November, yet Begbies Traynor’s findings suggest momentum in the sector has failed to spill over into December.

Palmer continued: “With rising transport and fuel costs continuing to drive up the cost of living and drag down consumer spending power, momentum has not continued into the festive period, with levels of financial distress among retailers 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.

“After the largest high street and online retailers kicked off their festive discounting extra early this year, independent retailers cannot compete on price or provide the convenience that savvy shoppers increasingly demand.”

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ABOUT THE EXPERT

Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.

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