It sounds like a cliche but the weeks leading up to Christmas and New Year are the most important trading period of the year for thousands of businesses.
For retailers especially, good or bad holiday trading can make the crucial difference between celebrating a strong year and in the most extreme cases, being able to open their doors in the following year at all.
Before we look at what factors are going to affect this year’s busiest shopping period – how have retailers navigated 2023 so far and how much is riding on the next six weeks?
Retail insolvencies on the rise
|No. of Insolvencies
Figures from The Insolvency Service *up to and including September 2023
Looking at the first three quarters of 2023, we can see that the number of insolvencies have jumped by 22% in comparison to the previous comparable period in the first three quarters of 2022.
The number of insolvencies in 2023 are already double the entirety of 2020 and will most likely be double 2021 by the end of the year, as well as overtaking last year’s total.
Next month is critical
According to a new research, two-thirds of retailers say the ‘double whammy’ of spiralling interest rates and inflation will hit peak trading in the run up to christmas.
A study which was carried out among 500 retailers and found that more than four out of ten sellers (41%) are planning to buy less stock for festive shoppers because of the impact of 14 consecutive rate rises over the past two years. Even though interest rates were held at 5.25% this month, the rate of increases continues to be felt throughout the sector.
Six out of ten retailers (60%) are sensitive to accusations of ‘greedflation’ – passing on above inflation prices rises to boost margins.
It found that 70% of retailers had reported that inflation had had a major impact on inventory over the past 12 months.
More than six out of ten shops (61%) said they were concerned about losing market share if they passed on the full cost of rising prices.
Economic turmoil over the past year caused by rising interest rates and inflation has left many retailers facing a bleak outlook in 2024.
Just less than half of those surveyed (49%) said their cash flow position was ‘precarious’ and 42% said they had had frequent cash flow issues this year.
While a third of those surveyed said they struggled to effectively manage cash flow.
Almost half of retailers (45%) have written off stock in the last year – with 29% forced to dump up to 10%.
Black Friday – which will fall on November 24th this year – will be even more important with 67% of retailers planning to discount products.
The consumer downturn over the last six months has left 65% of retailers with excess stock and this is a ‘major concern’ to 48% of sellers.
Almost four out of ten retailers (37%) say they have too much cash tied up in inventory and 45% said they were struggling to forecast demand using manual spreadsheets.
Some 41% of retailers said they struggled to buy the right amount of stock and 45% said they needed to reduce their inventory carrying costs.
Just over four out of ten retailers (41%) had run out of stock in some lines over the last six months, with three–quarters of those affected saying this had resulted in a loss of revenue.
For many business owners this year may have felt like a bad dream but that doesn’t mean you have to roll over and hope you wake up to a different outcome. You can take control of the situation by getting in touch with us today.
We offer a free initial consultation to any director or business owner who wants to discuss the main issues facing them and then what they can do about them.
One of our experts will outline all the options available to you whether that be buying your business crucial time restructure via an administration or closing down your company in an orderly manner so you can move onto the next venture via a Creditors Voluntary Liquidation (CVL).
No matter what outcome you want – if you get advice now, you’ll have more time to put measures in place to reach it.