The British Retail Consortium (BRC) say that retailers have “cause for concern” in the run-up to Christmas as sales of non-food items grew at the slowest rate since records began.
Non-food sales rose by just 0.2% in the year to October as the BRC claimed that consumers opted for ‘outdoor experiences’ and other excursions during half term instead of a visit to the shops.
The figures were released by the BRC just seven weeks before Christmas – the most important trading period for most shops.
Sales of clothing were particularly hard hit, as high street retailers struggle with stiff competition from online stores.
Chain stores and independents are disappearing from the high street at an alarming rate, with some shops in high levels of debt.
The British high street has seen some serious casualties in recent years. One-time high street giants like Woolworths have disappeared completely, while other retailers have scaled down their operations.
Marks and Spencer bosses this week announced plans to ‘accelerate’ store closures as they tried to reshape the business.
Other British retailers are struggling with large amounts of debt and obligations that many are struggling to pay back.
Fashion chain New Look made headlines earlier in the year, when its £1.2 billion debt pool attracted the attention of US debt investors.
It is a similar story in America, where the effects have been dubbed as the start of a ‘retail apocalypse.’
In the United States, 6,800 chain stores have closed. This is particularly concerning at a time when there is sky-high consumer confidence, unemployment is low and the U.S. economy continues to grow.
Low retail demand has led to more chains filing for bankruptcy and increased the number of delinquent loan payments by shopping centres.
Circumstances in Britain are similar, but the British economy also has uncertainty emanating from the country’s decision to leave the European Union.
This week, ‘Queen of Shops’ Mary Portas renewed calls for Phillip Hammond to scrap business rate increases which she said would kill one in three shops.
She described the business rate increases, which in some places have trebled, as the biggest blow to independent shops since the financial crisis.
The BRC also expressed concern that the small rise in interest rates earlier this month could lead to more households ‘feeling the pinch’ and spending less in stores.
Umbrella’s Licensed Insolvency Practitioner Thomas Fox said: “The retail sector is exposed to changing market conditions. A poor Christmas period could be enough to push many small and medium sized retailers to breaking point.
“If your business is struggling to meet its obligations then there are options open to you. Please get in touch to find out which is the most suitable.”
Contact Umbrella on: 0800 611 8888.