Insolvency firm reveals 8% rise in 'red flags' for retailers during November

Begbies Traynor has reported that there 32,722 general retailers marked with a 'red flag' against them in November; an 8% rise on the previous year.

If a company is awarded a Begbies Traynor red flag it means that the insolvency firm predicts a 33% chance of it failing within three years, or a 10% chance of this happening within one year.

Food and drug retailers (including pharmacies, supermarkets and convenience stores) experienced an 11% rise, with 8,832 red flags issued during the month. 

Julie Palmer, a Regional Managing Partner at Begbies Traynor, said:

“Without a strong end to 2016, I’m afraid many retailers may not survive much longer than the January sales.” 

Simon Cope-Thompson, Partner, Livingstone Partners LLP, gave us his view:

"In today’s highly competitive retail landscape, the sharp increases that we’ve seen in input costs following the vote for Brexit, combined with rising occupancy/employment costs due to increases in rent, rates and the introduction of the Living Wage, mean that there will inevitably be a consolidation and shakeout of weaker retailers. 

“We expect a number of smaller or more leveraged retailers, or those with weaker propositions and more inflexible routes to market, to struggle in the current environment, particularly if there is any marked weakness in consumer demand after the Christmas period."

Source : Insight DIY

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