Desperate UK Retailers running out of time to rescue Christmas sales slump

Parcel delivery concerns hoped to draw customers offline and back to the high street

Food retailers suffering most as shoppers leave big Christmas shop to the last minute this year

In the final days before Christmas, UK retailers are pinning all their hopes on a last minute sales surge from desperate shoppers who have left it too late for online deliveries, after another challenging festive trading period for the British high street, warns Begbies Traynor, the UK’s leading independent insolvency firm.

According to new research from Begbies Traynor, which tracked levels of corporate distress among UK businesses between 1 October and 17 December 2015, UK retailers have experienced yet another year of dire Christmas trading, with 24,737 retailers across the country now suffering ‘Significant’ financial distress.

Begbies Traynor suggests that the figures, which are marginally up compared to the same period last year (Q4 2014: 24,251), are even more concerning given today’s low inflationary environment and rising disposable incomes across the country, and indicate that retailers’ drastic discounting over the past month has failed to draw in the crowds.

The data shows that food retailers have been hit hardest, with an increase in ‘Significant’ financial distress of 11% from 3,819 last year to 4,226 this quarter, as the supermarket price war continues to push margins to rock bottom levels and as families leave their big Christmas shop this year to the eleventh hour.

However retailers will be encouraged by recent research from Springboard, which predicted that footfall in these final few days before Christmas will increase by 10% compared to earlier in the month, as shoppers seek out last minute high street deals now that most have missed the pre-Christmas delivery windows for online sales.

Julie Palmer, Partner and retail expert at Begbies Traynor, says:
“This year there has been more discounting than ever before from retailers in the run up to Christmas, as Black Friday deals extended into more severe festive promotions to try and boost lacklustre sales volumes. Unfortunately the swathes of cut price deals seem to have had little effect, with levels of financial distress among retailers even higher than last year’s shocking statistics.

“However with most of the UK’s parcels carriers still working through backlogs from earlier in the month and many consumers still haunted by last year’s delivery disappointments following the administration of City Link on Christmas Eve, we expect to see a late surge of shoppers hitting the streets this week to get their hands on some last minute bargains before the big day.

“The UK’s retailers must ensure that their post-Christmas discounts are priced right to capture their fair share of the New Year and January sales peak, but not so low that they risk causing longer term damage to their business models. However with online retail sales expected to reach record volumes on Christmas day and over the coming weeks, it is clear that any retailers without a strong online offering are in for a miserable 2016.”