New figures released today from Creditsafe’s quarterly Watchdog Report show the number of company insolvencies from the UK’s retail sector has increased by 59.4% over the past year. Failures in the second quarter of 2018 totalled 416, a significant increase from the same quarter in 2017, where 261 failures were recorded.
The largest company to go under during the last quarter by turnover was Poundworld, after being unsuccessful in finding a buyer to rescue it from collapse. Bargain Booze was the second largest failure recorded, after its owner Conviviality failed to convince shareholders to provide additional funds for the brand. Conviviality brands Bargain Booze and Wine Rack were then sold to Bestway for £7m.
According to Creditsafe’s data, there has also been a massive increase of 2464.5% in the level of bad debt owed to companies in the sector over the last three months, a rise of more than £51.5m to bring the total to £53.6m. This amount of debt will significantly increase pressure on UK retail businesses trying to keep their heads above water in the wake of the myriad of recent collapses.
On a more positive note, 11,475 new companies were created in Q2 2018, a sizable increase of 40.3% compared to the same period a year ago when 8,180 new businesses were formed. Meanwhile, the fastest growing outlets from the UK’s retail sector between the last two quarters include ASDA, Iceland and Ocado, suggesting consumers are increasingly choosing to do most of their groceries shopping at larger outlets.
The Watchdog report tracks quarterly economic developments across Retail and 11 other sectors (Banking & Financial, Construction, Farming & Agriculture, Hospitality, IT, Manufacturing, Professional Services, Sport & Entertainment, Transport, Utilities and Wholesale).
Chris Robertson, UK CEO at Creditsafe, commented: “2018 is proving to be an extremely difficult year for the UK high street, with many well-known chains unable to cope with increasing numbers of consumers visiting larger stores and turning to online shopping. The growing number of job losses and empty shops right across Britain is a big cause for concern.
“Nevertheless, it’s promising to see the resilience of entrepreneurs in deciding to open up new businesses in the face of uncertain and changing market conditions. It’s this positive attitude that will be needed to see the retail sector through this tough period.”