'Distressed' retailer numbers surge in UK, lockdowns hurt both stores and e-tail
The number of retailers in Britain that are in "significant financial distress" is on the rise and was increasing even before the latest lockdown in parts of the country began at the weekend.
That's according to the latest report from insolvency specialist Begbies Traynor, which tracks the struggling retail sector. Reported by The Guardian, it said that a little over 39,000 retailers (including both physical stores and online businesses) were facing severe financial problems in the quarter up to December 9.
To put this into context, that number is 24% higher year-on-year. And to bring home the enormity of the problem even more, it’s an 11% increase on the previous quarter, highlighting just how the situation has got progressively worse during this year.
The company expects more businesses to follow retail giants Arcadia and Debenhams into administration. That's no surprise given the tough year that retail has faced, as well as the fact that January is traditionally a busy month for retailer administration filings. The latest lockdown announcement — and the expectation of perhaps a UK-wide lockdown post-Christmas — is likely to make the situation so much worse in early 2021.
Particularly worrying is that while physical retail has faced the most challenges this year, the company also found as many as 11,500 pure-play online retailers facing financial difficulties.
Coming in a year when online has boomed because of the pandemic-linked lockdowns, it shows that being online isn't a guarantee of success.
Julie Palmer, a partner at Begbies Traynor, told The Guardian that “retail, which was already suffering a crisis of confidence, has been shaken to its foundations. High-profile administrations such as Arcadia Group and Debenhams not only threaten thousands of jobs, they also raise questions over the future of the high street as we know it, and I expect there to be more as we enter the new year”.
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