The number of North West retailers at elevated risk of failure has leaped from 28% to 36% in just six months, according to research by insolvency and restructuring trade body R3.
It shows that nearly 5,300 retail businesses with a bricks-and-mortar presence in the region are now considered at higher than normal risk of collapse in the year ahead. However, the North West’s shops are proving more resilient than those in any other region in the UK except London and Northern Ireland, and are below the UK average with 37% of shops at higher than usual risk.
The figures follow a number of high-profile insolvencies including Toys ‘R’ Us, electronics retailer Maplin, and most recently the Crewe-based Conviviality, which owned the Bargain Booze chain operating many stores throughout the region – especially in Lancashire.
Paul Barber, North West Chair of R3 and a partner at Begbies Traynor, comments: “These latest figures reflect the tough conditions on the high street. Consumer spending has been relatively flat, footfall has been declining in many retail centers, and the recent cold weather has only made matters worse.
“While shoppers are spending more online, e-commerce businesses are facing problems of their own. The true picture is that there are more structural changes in the retail market, in terms of consumer spending and shopping patterns.”
The figures show that 33% of online retailers in the North West are considered at higher than normal risk, up from 29% six months ago and equivalent to over 1,600 firms. In the UK as a whole, 34% of online selling firms are at elevated risk.
Amongst bricks-and-mortar stores in the North West, DIY and home furnishing stores are now the most vulnerable, with 38% at elevated risk of failure, followed by shoe shops and clothing stores with 34% and bookstores with 33% at elevated risk
Paul Barber adds: “As the retail landscape continues to shift, businesses need to find ways to adapt to the changing market. Many are already doing this successfully, for example by closing less popular stores and creating a more exciting in-store experience, whilst North West businesses have a lower risk score than any other region in the country. Retailers should continue to keep a close eye on profitability and seek expert help at an early stage if financial problems arise.”
The figures are from R3’s latest insolvency risk tracker. The tracker is compiled using Bureau van Dijk’s ‘Fame’ database and measures companies’ balances sheets, director track records and other information to work out their likelihood of survival over the next 12 months.