Member Article

‘Perfect storm’ facing Yorkshire high streets continues in quarter two

The well-documented challenges affecting the retail sector continued into the second quarter of 2019, with the latest research from insolvency and restructuring trade body R3 showing that the level of bricks-and-mortar shops at higher than normal risk of insolvency in Yorkshire and the Humber in June remained close to the high level recorded three months earlier in March.

The region saw the percentage of physical stores at elevated risk of insolvency reach 44.1% in June 2019, very close to the regional level for March of 44.2%. These figures are higher than the national average of 41.6% in June 2019 and 41.9% in March.

Of the nearly 10,300 high street stores in Yorkshire and the Humber, over 4,500 were once again deemed to be at higher than normal risk of insolvency in June. Across the UK as a whole in the same month, nearly 60,700 of the almost 146,000 physical retail businesses were considered to be in the enhanced risk category.

Yorkshire and the Humber performed relatively well compared with other regions of the UK in the latest figures, with the highest levels of elevated risk in the retail sector being seen in the South East (45.9%), the South West (45.8%) and Wales (45.2%). Once again, of the 12 UK regions surveyed, London had the lowest levels of bricks-and-mortar shops at above normal risk with 37.7%, followed by the East of England (38.8%) and the North West (40.4%).

In terms of the different types of shops at higher risk of insolvency in Yorkshire and the Humber, home furnishings stores again performed most poorly with 45% at elevated risk, followed by motor retailers (40.3%), clothes stores (39.1%) and market stalls (38.3%).

Two in five (41.3%) of online retailers based in Yorkshire were recorded as being at higher than usual risk of insolvency in June, higher than the figure for the UK overall (36.1%) but lower than in the South West (43.4%), the South East (43.2%), and the East Midlands (41.6%).

“The trials and tribulations of the UK’s beleaguered high streets have been hitting the headlines over the last couple of years, while high-profile CVAs have been very much on the business news agenda,” commented Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds.

“The well-known pressures of rising rents, rates and employment costs facing bricks-and-mortar stores have combined with falling consumer spending in the face of political and economic uncertainty. While much of the pressure on the high streets has been blamed on competition from the internet, it’s interesting to see that in June, over a third of online retail businesses in the UK were also deemed to be at higher than normal risk of insolvency in the next 12 months.”

Ms Temple continues: “Unfortunately, until UK businesses have the clarity they need in order to plan effectively following Britain’s withdrawal from the EU, the retail sector, along with many others, is likely to continue to face some challenges. As ever, our advice to any businesses experiencing financial distress is to seek professional advice as early as possible when the most options will be available to prevent problems from escalating.”

This was posted in Bdaily's Members' News section by Emma Kilmurray .