Number of North West retailers at risk of failure rises sharply, data shows

The number of retailers in the North West at a heightened risk of financial failure has increased sharply in recent months, according to research.

A study by insolvency and restructuring trade body R3 found that the number of high street retailers in the region considered at an elevated risk of failure within the next 12 months rose from 23% in June to over 28% this month.

The figure is equivalent to almost 4,000 businesses in total.

Online retailers and catalogue companies in the North West are also suffering, with the number operating at a greater-than-usual risk up from 27% to 29% during the period. This is equivalent to more than 1,300 companies.

Shoe shops were found to be under the most pressure, with 30% at a heightened risk (up from 24% in June). Next were fashion stores (at 29%, up from 23%) and home furnishings shops (at 28%, also from 23%).

R3’s findings follow the latest data from the Office of National Statistics, which said that year-on-year retail sales dipped this year for the first time since 2013, with sales figures for October coming in 0.3% lower than the same point in 2016.

The North West chair of R3, Paul Barber, who is also a partner at professional services consultancy Begbies Traynor, said: “The outlook for retailers is frostier than in recent years. With inflation eating into incomes, North West consumers are having to rein in their spending.

“At the same time, the pattern of spending is changing, with the growth in online sales, the Black Friday promotions, and shoppers choosing to spend more on ‘experiences’ such as eating out rather than buying products.”

He continued: “While the North West stands to benefit from the rise in internet shopping, given that we are a world leader in e-commerce and catalogue stores, it is no easy option.

“These companies can face problems of their own including competition from overseas, distribution problems, and the need to keep up with fast-changing technology, and in fact their risk scores are higher than traditional stores.”

Speaking further, he said: “With the whole retail landscape shifting, both traditional and online businesses need to monitor their operations carefully and find ways to adapt to the changing trends.”

R3’s findings, from the trade body’s latest insolvency risk tracker, are compiled using Bureau van Dijk’s ‘Fame’ database. The organisation measures businesses’ balance sheets, director track records and other information to calculate their likelihood of survival over the next year.

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