Retail instability grows.
NORTH East retailers will be hoping Christmas shopping starts early this year following new research which shows a drop in levels of business stability in the sector.
The proportion of regional retailers with a heightened risk of getting into financial difficulty in the next year has risen for a sixth month in a row, according to a study by insolvency and restructuring trade body R3.
It is now three percentage points higher than it was in March, at 27% compared to 24%.
September 25 marks the latest 'Quarter Day' on which commercial rental payments are traditionally due to be made, raising concerns that more traders in the sector will be feeling the pinch on their finances.
Neil chair of The quarterly rent payments - which traditionally fall around the 25th of March, June, September and December - can mark a significant outgoing for struggling firms and R3 said many well-known high street names have entered into administration in the run-up to or days following Quarter Days over the last 10 years. Northumberland furniture retailer Dickinsons announced last week that it would be closing its high street stores, while Greenwoods and Toys'R'Us are among leading retailers that have fallen into trouble in recent weeks.
R3 reviews 11 regional industry sectors every month for their business stability, and nine sectors were found to have firms that have seen their risk of insolvency increase since months, by between two and four percentage points.
Only the transport and haulage sector has recorded an improvement and the restaurant sector has held steady over the last six months.
Overall, 29% of all North East businesses have a heightened risk of entering insolvency in the next year, which is the same as this month's cross-sector national average, but is four percentage points up on where it stood back in March.
Neil Harrold, chair of R3 in the North East and a partner with Hay & Kilner Law Firm, said: "Competition from online retailers, rising rental and staff costs, and the current period of general economic uncertainty are combining to create tough conditions on the High Street, and many regional retailers will be fervently hoping that Christmas shoppers start turning out sooner rather than later.
"The financial outlay associated with Quarter Day can have a big impact on retailers' operations, and if any owners feel that the cost could be a tipping point for them, they should be speaking to their landlords as soon as they can to see what can be done - after all, the vast majority are likely to want to avoid the worst case scenario of their property becoming avoidably empty.
Harrold, R3 "As with any business, insolvency isn't necessarily the end of the road for a retailer - it can be an opportunity to restructure and rethink the business model, and many retailers have come out of administration and subsequently gone from strength to strength.
"With insolvency risk continuing to rise across most sectors, North East management teams need to retain a firm grip on their businesses' financial situations, so they can move quickly and access the widest possible range of advice and solutions to any problems that could be coming their way."
Neil Harrold, chair of R3
North East retailers will be hoping Christmas shopping starts early this year
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|Publication:||The Journal (Newcastle, England)|
|Date:||Sep 26, 2017|
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