The UK’s retail sector has always had a mixed picture with a variety of winners and losers and 2023 with all its ups and downs is proving no different.
But should we be concerned about the financial vulnerability of the industry as a whole if even the most advantaged parts of the market are struggling?
A great comparison demonstrates just how challenging the market is between two retail icons, who are heading in complete opposite directions. M&S surprised pundits by hiking this year’s profit forecast not long after the John Lewis Partnership posted a £234m annual loss.
Online retailers’ fate proves no better with sales falling by 10% in 2022, compared to growth between 2019 and 2021 of 81%. Major fashion e-tailers BooHoo and ASOS had their trade insurance cover cut earlier this year.
Rise in Retail Insolvencies
| Year | No. of Insolvencies |
| 2019 | 1,307 |
| 2020 | 877 |
| 2021 | 930 |
| 2022 | 1,804 |
| 2023 | 1,227 |
Looking at the first six months of 2023, we can see that the number of insolvencies have jumped 61% by comparison with the previous comparable period in the first half of 2019 pre pandemic and by 27% as against the first half of 2022.
Out of all corporate insolvencies that occurred in the first half of 2023, 9% were in the retail sector, with 1,090 retailers failing. Whereas in the same period pre-pandemic in 2019, only 675 retail companies filed for insolvency (8% of all insolvencies).
Major Retail Closures
The Centre for Retail Research publishes statistics covering the failure of major retailers in the UK. These figures capture the number of companies affected, as well as the number of retail stores and retail jobs put at risk.
Looking at the records we can see that 2020 was the worst year for collapses since they first began, surpassing even the previous record set in 2008 at the start of the global financial crisis when the numbers were heavily distorted by the collapse of Woolworths.
In 2020, 54 major retailers failed, putting 5,214 stores and 109,407 jobs at risk. After the cull in 2020, the figures for 2021 were the lowest for many years with only 19 major companies filing for insolvency, affecting 1,758 stores and 26,274 jobs.
The outcome for 2022 was a busier year, with 49 major failures, including high profile names such as M & Co, Joules and McColls, but overall the failures were of smaller companies so that only 2,318 stores and 34,907 jobs were affected.
This year had consisted of smaller failures until the collapse of the Wilko chain. By mid-August there had been 39 major failures, impacting 962 stores (of which 408 are Wilko units) and 19,046 jobs (of which some 12,000 are at Wilko). Other notable business failures this year have been Paperchase, Cath Kidson and Tile Giant.
The constant fluctuation in the conditions in which retailers are facing might raise alarm bells especially when even the strongest businesses seem to be struggling.
However this doesn’t mean there aren’t options for retail owners and directors that would give them the best chance of survival.
We offer a free initial consultation for anyone who wants to find out what they can do to protect their business or close it quickly and efficiently, letting them move onto their next professional challenge rather than struggle on against worsening conditions and lengthening odds that things might get better before they get worse.
If you’re a worried retailer, shop owner or regular customer who’s wondering how this will affect their own business – get in touch with us today and take early action while you can still positively impact your own business.