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Corporate Recovery News - Fresh Fears for the Dying British High Street?

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Fresh Fears for the Dying British High Street?

A dark cloud is hovering over the British high street in 2013, according to research, with 2012's financial misery already rolling over into this financial year. At the heart of the problem lies a range of serious financial issues which are facing at least 140 retailers.

 

Corporate Recovery

Begbies Traynor, a law firm specialising in the field of corporate recovery, has already claimed that in 2013 there will be a rising number of retailers in the high street facing a worrying and uncertain financial future.

This research looks at companies experiencing a range of 'financial distresses'. Even more worryingly, a number of these retailers are at the top of their yearly cash cycle, which means that they should, in theory, be experiencing their best cash position of 2013. 

You can read the full article from Begbies Traynor.

 

Market Challenges & Financial Distress

Retailers have been hit by various factors causing market challenges & financial distress in 2012 which have depressed their sales. These include wider economic problems and even the prolonged period of wet weather.

This has led to 140 UK retailers - from large national chains to small single-unit outlets - being added to the financial 'critical list' of Begbies Traynor. The Corporate Recovery firm believes that retailers on this list will not be able to survive over the next year, at least in their current operating form.

Certain sectors of the retail industry are experiencing particular financial pressure, such as independent chemists, off-licences and book retailers, who are all under particular pressure from large supermarkets and online retailers. The Corporate Recovery firm has also warned that their list is just the tip of the iceberg, with thousands of specialist and small retailers desperately struggling to survive in the current climate of austerity.

The impact of online shopping has also continued to affect the financial status of high street stores. Book stores typically have peak sales in the Christmas run-up, but consumers are increasingly using traditional book stores to simply browse and identify the titles they want before purchasing them online at a cheaper price. The book retail sector has also had another financial hit by the introduction of e-readers.

 

Financial Pressure and the Show-Rooming Trend

The latest consumer trend has been dubbed 'show-rooming' and it describes the growing tendency of customers to visit high-street retailers simply to test out a product, before using their digital device to find the best possible price online and purchase it. British shoppers may be becoming savvier with their purchasing but the financial impact is damaging the British economy.

 

Will Consumer Options & Financial Education be the death of the British High Street?

It is natural for customers who are increasingly cost-conscious and are also rapidly educating themselves about the benefits of online shopping and price-comparison websites. Even those who don't shop online are heading away from the high street and going to single-stop department stores and supermarkets, where they can buy the bulk of their products in one go and benefit from the perceived value of buying from a single retailer. Other factors include a rise in town-centre parking and travel costs, which are further discouraging shoppers from browsing in their local high street.

 

What Next for the UK's Ailing High Street?

The retail quarterly rental payment day fell on Christmas Day in 2012 and many will have found that this coincided with customers spending less, even in the January sales. This could put many new retailers under pressure and even drive up the number of insolvencies. Following the news that HMV is going into administration, this certainly seems to be the case. Market analysts and retailers will be viewing the next few months with trepidation as they hope to see some signs of a return of customers to the high street in the spring.

Is there any light ahead for the British high street or is are financial situation on a downward spiral, with corporate recovery firms being kept busy in the year ahead.

 

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