Member Article

Quarter Day looms for retailers

North East retailers are in for a difficult day this Thursday, when their quarterly rental payments are due.

On the last quarter day in June, the sector saw the largest number of retail administrations since the height of the recession, and the 29thSeptember could see a repeat of this trend

Linda Farish, chair of R3 North East believes that this could have serious implications for jobs in the region

She commented: “Last time round, the rent day identified many retail businesses that had survived the last recession, but which did not have the funds to meet their rental obligations – they had depleted their reserves to stay afloat and had no contingency plan for additional costs, unexpected outgoings or a fall in sales.

“We have seen little improvement in retail sales, economic growth or consumers increasing their expenditure, and for that reason we are likely to see further retail casualties.”

Over a quarter of all retailers have reported cash flow difficulties, while 8 percent were facing the prospect of insolvency over the next 12 months.

Retailers are now being squeezed from all sides - consumers are spending less and shops are being forced to reduce their prices to get people through their doors. In the meanwhile inflation and increasing commodity prices are also increasing their costs.

Linda added: “Given the nature of the retail business, it is extremely worrying that one in four is experiencing cash flow difficulties, as it suggests that many are holding a large amount of stock or have slow moving stock.

“For the businesses that are given another chance by the bank, hoping Christmas expenditure will see them return to economic health could be in vain - consumers are curtailing their spending as the price of everyday essentials goes up, and they are likely to be spending less on Christmas this year.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .