Thousands of small retailers face Christmas collapse

A combination of lacklustre sales, increased wages, heavy discounting and the weakness of the pound threaten to push many businesses to “breaking point”, warns a new report by insolvency specialist Begbies Traynor.

The report claims that as many as 21,802 UK retailers – 97% of which are small and medium-sized businesses – are struggling.

This marks an increase of 6% compared with the same period last year.

It adds that many of these could face closure in the New Year when quarterly rent bills become due, the Independent reported. 

Begbies Traynor partner Julie Palmer said: “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, unable to compete on price or provide the convenience that savvy shoppers increasingly demand.

“With the sector’s 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.

“Unfortunately, without a strong end to 2016, I’m afraid many smaller retailers in particular may not survive much beyond the January Sales.”

Consumer spending has been held up by credit card debt, but Palmer warned that that momentum has stalled during the festive period.

“Retailers were hopeful that 2016 would be a bumper year for Christmas sales, after reports that credit card debts hit a record high in October.

“But with rising transport and fuel costs continuing to drive up the cost of living and drag down consumer spending power, it seems that this momentum has not continued into the festive period, with levels of financial distress among retailers now even higher than last year.”

Retailers told Retail Week that they anticipate a last-minute surge of shoppers to pour into stores on Thursday, Friday and Saturday this week.