Retailers 'facing critical financial issues'

  • 24 December 2012
  • From the section Business
Comet store in Hendon, north London
Image caption Begbies Traynor is predicting more national chains are at risk of going under in 2013

Nearly 140 retailers are in a "critical condition" despite Christmas being their peak trading time, business recovery firm Begbies Traynor has said.

Its UK business solvency survey found 13,700 more firms were in distress, a 35% rise in the quarter to December.

It said many could struggle to meet their quarterly rent payment, due on Christmas Day.

Begbies Traynor has predicted a rise in the number of both national and regional retail insolvencies in 2013.

The report suggested the worst affected retailers include specialists in books, news and stationery, where distress signals were 85% higher on the previous quarter.

Online retailers, supermarkets and shops selling decor and household goods have meanwhile, seen sales figures improve.

Traders of furniture, lighting, home decorations, hardware and paints have seen a combined 13% fall in distress levels in the last three months, as homeowners decide to "improve, not move".

'Window shopping"

Julie Palmer, partner at the company, said many consumers were browsing in high street stores before finding the product they want for a better price on the internet.

"While book sales usually peak in the run up to Christmas, the move by consumers to use traditional book retailers simply for window shopping before purchasing online at discount prices has seriously impacted this sector, which has already suffered considerably from the growing popularity of e-book readers," she said.

Pharmacies, personal care outlets, and off-licences have also seen their distress signals rise.

Begbies Traynor said this was thanks to consumers being more careful with what they spent their money on.

The latest high-profile high street casualty was electrical chain Comet, which closed all its 236 stores this month.

Ms Palmer added: "Though the performance of national retailers is well documented, it represents just the tip of the iceberg with thousands of smaller and specialist retailers struggling to stay afloat in today's austerity Britain.

She said that some may survive, thanks to last-minute Christmas shopping, but that others would be hit by the quarterly rent day, which falls on Christmas Day, as well as fierce competition and pressure to keep profit margins low.

The predicts a number of national or regional retail chains could fail in the next 12 months.

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