New research published by the accountancy practice Wilkins Kennedy shows that retail insolvencies were at their highest level in 2013 for five years. The figures highlight that despite the economic recovery, the number of retailers falling into financial difficulties continues to grow. For the year to the end of March 2014, 1,287 retailers became insolvent.
This was 12% higher than the year before, when there were 1,149 insolvencies. As a result more and more companies are seeking corporate recovery advice before it’s too late.
The Retail Sector
The research showed that traditional retailers have continued to lose market share to online companies. However, there have also been problems for small and independent convenience outlets, many of which have had to seek professional corporate recovery advice. The major supermarkets are now making more in-roads into the local markets, which is taking business away from the old-fashioned corner shop.
The big brands have the financial capabilities to build their business and can cut costs without hampering their profits. The independent stores simply can’t compete at this level, which is why their businesses are struggling. The major supermarkets are also having to compete with the discount market, where there is heavy competition over prices. As retailers lower their prices even more, it could cause further problems for the smaller stores.
While some sectors of the economy are still struggling, the financial recovery has provided a boost for other areas. Those selling higher-cost items, such as electrical stores, and DIY retailers have been two of the sectors to benefit from a resurgent property market.
The latest research does show some hope for companies requiring corporate recovery advice. There has been an improvement in lending levels for the retail industry. £17 billon was made available across March. This has increased since lending reached a low in August 2013 of £15.5 billon and is now at its highest level since November 2011. This might not be enough though to save some of the smaller retailers, as banks are less likely to lend to these outlets.
At tri group we can assist our clients with a wide range of financial matters with our teams who specialise in specific sectors. If you require help with accountancy, audit and tax services, corporate recovery advice or management support, then speak to one of our team who can provide you with the right advice.