What is going on in shops and stores?
Many businesses are facing unprecedented pressure from all sides in the rare and unfortunate economic situation many of them find themselves in at the moment.
Squeezed customers are cutting their expenditure while on the other end of the spectrum, business suppliers and creditors are tightening their terms and looking for their repayments sooner rather than later.
And the sector which is most acutely caught in the middle of these two important variables is retail.
It’s not surprising then that prices in British retail stores surged last month at the fastest rate in more than a decade with even higher increases forecast to come by those who know the situation best.
According to the British Retail Consortium (BRC), non-food inflation has also accelerated to 2.2% in April, up from 1.5% in March, which marks the highest rate of inflation since the date series began in 2006.
Helen Dickinson OBE, Chief Executive of the BRC said that, “The impact of rising energy prices and the conflict in Ukraine continued to feed through into April’s retail prices.
“Global food prices have reached record highs, seeing a 13% rise in the last month alone, and even higher for cooking oils and cereals. As these costs filter through the supply chain, they will place further upward pressure on UK food prices in the coming months.”
“Retailers will continue to do all they can to keep prices down and deliver value for their customers by limiting price rises and expanding their value ranges, but this will put pressure on them to find cost-savings elsewhere.
“Unfortunately, customers should brace themselves for further price rises and a bumpy road ahead.
Not every retailer will be able to successfully complete the balancing act between absorbing these economic blows and being able to continue to trade.
In the latest set of monthly corporate insolvency statistics released by the Insolvency Service, wholesale retail insolvencies nearly doubled from 50 in February to 99 in March while trade retail insolvencies rose from 99 in February to 158 in March 2022.
Chris Horner, Insolvency Director with BusinessRescueExpert, said: “For retail businesses already struggling with their outgoings, the negative hits just keep on coming with higher inflation, higher bills and employment related taxes and customer confidence falling off a cliff.
“Impossible though it might have seemed, the next six months might be even tougher and more difficult to navigate for companies than any in the previous two years – and without a furlough scheme, business rates relief, bounce back loans or other support measures to offset the damage.
“The best course of action for many business owners and directors is to take the initiative and get advice on what changes they can implement to protect their business – now – before waiting for things to potentially get worse.”
We couldn’t agree more.
Like the lookout in a lighthouse ahead of an incoming storm, we can see the waves starting to swell and winds starting to rise before most of the mainland have started to batten down their windows.
But we can raise the alarm – and offer some support while it’s possible to make the necessary changes that can be the difference between a business surviving and failing.
Once we can get a clearer picture of their unique circumstances, we can closely work with them to create a roadmap that could lead back to profitability if there is one.
If the debts or other problems turn out to be insurmountable then we can advise on other strategies they can follow including liquidation that will allow them to close quickly and with a minimum of fuss and stress – which will allow them to relaunch when conditions are more favourable than they are today.