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Number of UK retailers in ‘significant’ distress jumps 24 percent in Q4

By Huw Hughes

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Business

The number of UK retailers - including both online and bricks and mortar stores - in “significant financial distress” jumped by 24 percent in the fourth quarter, as fresh lockdown restrictions and ongoing Brexit uncertainty continue to impact the industry.

With Christmas just around the corner, a total of 39,232 retailers said the financial pressure they were under was “significant” - up 11 percent on Q3, according to research from UK corporate restructuring firm Begbies Traynor.

The data also reveals that over 20,000 high street retailers and over 11,500 online retailers are now in difficulty - an increase of 22 percent and 27 percent, respectively, since the run-up to Christmas 2019.

It comes at a time of unprecedented difficulty for the UK retail sector due to continued uncertainty over a trade deal between the UK and EU compounded by tighter Covid-19 restrictions enforced over the weekend in parts of England.

Boris Johnson announced Saturday a new Tier 4 level of restrictions in London and the South East following a surge of what is thought to be a more transmissible strain of coronavirus.

It came just ahead of the week building up to Christmas, days when retailers had hoped they’d be able to recoup some much-needed sales following a year tainted by lockdowns.

Vaccines ‘a speck of light at the end of the tunnel’

Commenting on the figures, Julie Palmer, partner at Begbies Traynor, said in a statement: “Without doubt, this has been one of the toughest years ever experienced in the retail sector. While many industries have been hit hard, retail - which was already suffering a crisis of confidence - has been shaken to its foundations.”

And it’s not only the smaller companies that are struggling. Earlier this month, Topshop-owner Arcadia collapsed into administration, putting 13,000 jobs at risk. The next day, Debenhams announced it would be winding down business and closing its 124 stores, putting some 12,000 jobs at risk.

These high-profile administrations “raise questions over the future of the high street as we know it”, Palmer said, adding: “I expect there to be more as we enter the New Year.”

Palmer said that vaccines offered “a speck of light at the end of the tunnel”, but uncertainty about Brexit and its impact on trade with the UK remains.

Palmer added: “[T]he effects of Covid-19 will continue to create a chill throughout the whole of the year and beyond, with it likely we are only seeing the tip of the iceberg for financial distress amongst businesses currently.”

Photo credit: Pexels, Artem Bali

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