Insolvency warning to firms in 'critical' health
IT HAS been a challenging year for retailers. The demise of household names on the high street has shocked many and traders have suffered the strains of the economy.
During the sale season, retailers enjoyed an increase in footfall, with thousands of bargain hunters flooding the streets in search of a deal, but looking ahead to this year, there are still some tough trading conditions the region's retailers have to fight.
Business recovery group Begbies Traynor has released worrying research as traders enter the first quarter of 2013.
The group warned that a swathe of retailers are at risk of going under in the new year after tough Christmas trading conditions left almost 140 firms in a critical condition.
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Consumer cutbacks and the increasing popularity of online retailers have led to a sharp rise in the number of firms in financial distress.
The study found almost 140 firms were in a critical condition in the fourth quarter, meaning they are on the brink of collapse, while more than 13,700 were in "significant" distress – up 35 per cent during the three months to December 17.
Julie Palmer, partner at Begbies Traynor, said: "With fierce competition and significant margin pressure throughout the January sales period as consumer tighten their belts after Christmas, we could well see a surge of new insolvency activity during the first quarter of 2013."
According to Begbies, firms on the critical list include independent outlets, as well as major national and regional retail chains.
The practice of so-called "showrooming" has also hit many bricks and mortar retailers, with consumers visiting high street stores to try a product before finding the best price online.
Over the festive sales season, retailers in Hull have seen an influx of shoppers venture on to the high street but are aware of the challenges ahead.
Lee Appleton, centre manager for Prospect Shopping Centre said that in the week leading up to Christmas, the centre saw its highest footfall for a few years, with 200,000 people passing through the doors.
He said: "These are fantastic figures for us and we have had good footfall over the sales period, with a constant flow of customers through the doors looking for a bargain."
But Mr Appleton admitted he can see some tough times ahead for retailers.
Mr Appleton said: "It's not going to pick up instantly.
"It's a very fragile market at the moment.
"Times are tough and only time will tell if retailers can weather the storm.
"It will be very difficult this next quarter – from January through to March – and I can't see people coming out in droves."
St Stephen's centre manager Jim Harris said the shopping venue has also enjoyed a busy sales season.
He said: "We had a fantastic Boxing Day.
"It was exceptional and we had nearly 1,000 people queuing for Next."
However, he admitted that, while the centre has seen a mass of shoppers over the past week, the end of the year "has been good but not spectacular".
Mr Harris said that, for St Stephen's, it has been a pretty positive year overall but it has been difficult.
He also said that throughout this year, there could be casualties on the high street.
He said: "We have seen a lot of purchasing on credit and I think it is going to be a fairly skinny first quarter but that is not something the smart retailers haven't factored in.
"The first quarter could be very difficult and we could see some casualties. Now, it is very important that retailers have a multi-platform offering. You have to be web-savvy and social media-savvy."
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