Thousands of UK retailers in significant financial distress

By

Barbara Santamaria

Published
Jan 28, 2020

High street retailers have been told to prepare for growing environmental demands from consumers or risk falling out of fashion, as the number of retail businesses in financial distress grows by 2%.

According to Begbies Traynor, an insolvency firm, nearly half a million UK businesses are in significant distress, with the retail sector particularly badly affected. 

In fact, there were about 31,615 retailers in significant distress in the fourth quarter of 2019.

Ads

Many of these were companies formed after 2014, demonstrating that younger businesses are the most vulnerable to failure. 

The malaise has also hit online retailers, with an 8% year-on-year increase in the number of online specialists facing significant financial distress.

“The landscape of UK business is slowly changing. In order to capture the attention of consumers, businesses need to demonstrate that they not only have a compelling product or service at the right price, but also one that has strong environmental credentials to boot,” said Julie Palmer, partner at Begbies Traynor.

“The modern consumer in the UK is increasingly being motivated by impact on the planet, and so the appeal of fast-fashion, like the Boohoo and Primark models could fall from favour in 2020. The key for businesses will be to keep up with this trend and understand the modern demands of the consumer.”

The insolvency firm warned that the slowing economy could see the distress figure exceed 500,000 companies in 2020.

The real estate and property sector was also badly hit, with the number of struggling companies rising by 13% to 53,000.