The number of UK retailers on the brink of collapse surged by a quarter in recent months, a new report has warned.
Around 2,124 UK retailers were in critical financial distress between October and December 16, 25 per cent higher than in the previous three months, new research has shown.
The latest figures from Begbies Traynor include a 29 per cent quarter-on-quarter surge in the number of general retailers on the brink of collapse and a 17 per cent jump among food and drug retailers.
Julie Palmer, a partner at Begbies Traynor, said: “This year has highlighted the resilience and adaptability of some UK retailers, but the sector remains under significant strain.
“Clearly, some retailers have found ways to manage financial pressures effectively, but others, particularly in general retail, are struggling under the weight of rising operational costs and squeezed consumer spending.”
As high street shops grapple with lower footfall and reduced consumer spending amid the cost-of-living crisis, almost 10,500 UK shops closed their doors for the final time in 2023, according to figures from the Centre for Retail Research.
Almost 10,500 UK shops closed their doors for the final time in 2023, according to figures from the Centre for Retail Research
WHSmith
The number of struggling retailers showed a marginal decline of nearly one per cent compared to the same period last year.
Palmer noted that poor performance in “traditionally a critical month for the sector, further underscores the tough trading conditions, as consumers hold off on purchases amid low confidence and rising prices”.
Boxing Day footfall across UK retail destinations dropped by 7.6 per cent compared to the previous year, according to data from MRI Software.
Analysts suggest this decline largely reflects a shift towards online shopping, with consumers expected to do most of their sales shopping via digital channels.
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The clothing and footwear sector faced particular challenges, with sales volumes declining by 2.6 per cent in November.
Homebase was among the major casualties, calling in administrators last month after an “incredibly challenging” three years in the DIY sector.
Several major retailers have announced store closures for early 2025, including:
- WHSmith will close its Winton branch in Bournemouth on February 15, following multiple closures since March 2023.
- Fashion chain Monki plans to shut all seven of its UK stores, including sites on London’s Carnaby Street and Manchester’s Arndale Centre.
- Millets is set to close six stores, with four locations being rebranded as Go Outdoors sites.
- The Entertainer will shut its Cameron Toll shopping centre store in Edinburgh on January 4, ending a decade-long presence.
The autumn Budget measures are set to further intensify challenges for retailers in 2025. Palmer warned that increases to employer National Insurance contributions will “significantly dial up the challenges faced by these businesses”.
She said: “These changes, alongside increases to the minimum wage, will negatively impact cash flow and, consequently, we expect elevated insolvency levels across this sector during 2025.”
Andrew Murphy, the Entertainer’s boss confirmed the Budget’s impact, stating the National Insurance increases had forced the group to abandon plans for two new stores.
A total of 28,747 retail businesses in the UK were in significant financial distress during the latest quarter, down from 34,494 in the same period last year.
Palmer noted that while some businesses have adapted to financial pressures and changing shopping behaviours, others remain vulnerable.
Traditional retailers face mounting pressure from online competitors such as Temu and Shein, which have attracted shoppers with low-cost fast-fashion offerings.
Despite these challenges, the marginal year-on-year decline in retailers facing critical distress offers what Palmer called a “glimmer of hope” for the sector.