Almost 400 retailers went bust over the summer of 2018 – 13% more than at the same time last year, according to new analysis.
House of Fraser was a high-profile casualty during the third quarter of the year. The retailer, ranked as a Leading retailer in IRUK Top500 research, was subsequently bought by Sports Direct in August this year, which hopes to keep open more than the 31 out of 59 stores that were set to be closed over the retailer agreed a company voluntary arrangement with landlords. Other names to fail over the summer included Orla Kiely and Saltrock. A fuller list of retail failures so far this year is available on the Centre for Retail Research website.
The figure came as the overall number of failed businesses fell by 20%, year-on-year, according to the Q3 Industry Report from Dun & Bradstreet. It also came despite growing retail sales over the summer and early autumn. ONS figures for September showed shoppers spending 4.2% more that month across sales channels, with online sales growing by 11% year-on-year, but falling by 2.1% compared to the previous month.
“As retail sales have performed well over the summer months, the sector should perform slightly better over the next quarter,” said Markus Kuger, lead economist at Dun & Bradstreet. “This will be further buoyed by the fact that unemployment remains at its lowest levels since the 1970s, thereby helping to stimulate domestic demand. In addition, supportive measures by the government, announced in the budget, will help small retailers by cutting tax burden and apprenticeship levies. However, the long-term trend towards internet shopping will persist, thereby putting pressure on bricks and mortar retailers.”
Kuger said that businesses should keep an eye on the number of business failures, and continue to monitor the Brexit talks. “It’s important to remember that the UK’s economic performance will largely depend on the outcome of the Brexit talks and in this vein, businesses must keep a close eye on the potlicial developments as time for a settlement between the UK and the EU is running out in the next weeks, creating the risk of a no-deal Brexit,” he said.
The construction industry also bucked the overall trend, with liquidations in the sector rising by 17% compared to the same time last year. Overall, 677 companies in the sector filed for insolvency.
Image courtesy of House of Fraser