Member Article

Yorkshire retail industry suffers from mounting distress

Yorkshire’s retail industry is suffering from mounting levels of business distress, despite distress across the region as a whole is becoming less prevalent according to research from Begbies Traynor.

The latest quarterly Begbies Traynor Red Flag Alert research, which monitors the financial health of UK businesses, has revealed that incidences of very serious or ‘critical’ business distress in Yorkshire dropped by 8% in the three months to September this year, compared to the same period last year.

This affected 197 businesses in Q3 2014 compared to 214 in Q3 2013. Across the rest of the UK, an annual fall in serious distress of 12% was recorded.

The region’s more prolific but less severe ‘significant’ business distress, often regarded as an early warning of more serious problems to come, had not increased since the previous quarter, affecting 14,395 businesses across the region this quarter.

This was set against a national average increase of 1% Annually, ‘significant’ distress in Yorkshire rose by 6% compared to the third quarter of 2013. The UK average rise was 10%.

Against the backdrop of improving fortunes for Yorkshire business as a whole, the region’s retail industry fared less well in Q3 of this year.

Year on year, the number of businesses across food and drugs retailing and general retailing displaying symptoms of ‘significant’ financial distress was up by 35%, from 1,196 retail companies to 1,613.

The quarterly increase in distress was less pronounced, it rose by 5% from Q2 of this year to Q3.

Nationally, the retail sector was also troubled, with ‘significant’ distress up by 53 per cent among food retailers and by 46 per cent among general retailers over the past year to Q3 2014.

Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: “As the largest private sector employer and a crucial factor in consumer confidence, retail is eminently important to Yorkshire’s economy.”

“The retail landscape has been transformed over the past five years, with online shopping continuing to gnaw away at the fortunes of bricks-and-mortar retailers.

“The sharp rise in the ever cheaper smartphones and tablets that make online shopping increasingly enticing has served to drive yet more nails into the coffins of some high street retailers.

“Unfortunately, retail insolvencies continue to rise and it is particularly the small independent convenience stores that are suffering as the big supermarkets continue their relentless march into the convenience store format.

“With the added pressure on these businesses from all sides, access to funding becomes ever more critical to the sector if it is to survive and prosper.

“The government needs to give some urgent thought to enabling SMEs in retail, as in other sectors, to invest in their futures in order to avoid the spectre of the annihilation of independent stores on our high streets.”

This was posted in Bdaily's Members' News section by Clare Burnett .