A new Red Flag Alert report from Begbies Traynor who are an insolvency specialist has warned that retailers are on the brink of collapse.
Boxing Day sales plummeted as the sector is “under significant strain” amid operational costs and consumer spending has fallen amid the ongoing cost-of-living crisis.
Begbies Traynor found that 2,124 retailers between October and 16 December are in critical financial distress, this is 25% higher than the previous three moths between July and September.
This marks a slight decline of almost 1% compared to the same period the year before.
There is a 29% quarter-on-quarter rise of the number of retailers who are on the brink of collapse and there is a 17% hike amongst drug and food retailers.
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The retailers who are struggling the most are online sellers, mobile food stands, convenience stores and takeaways.
Julie Palmer, a partner at Begbies Traynor, said, “This year has highlighted the resilience and adaptability of some UK retailers, but the sector remains under significant strain.
“Clearly, some retailers have found ways to manage financial pressures effectively, but others, particularly in general retail, are struggling under the weight of rising operational costs and squeezed consumer spending.”
She added, “Adding to this uncertainty, the measures announced in the Autumn Budget, including the planned increase to employers’ national insurance contributions, will significantly dial up the challenges faced by these businesses.
“These changes, alongside increases to the minimum wage, will negatively impact cash flow and, consequently, we expect elevated insolvency levels across this sector during 2025.”
