2018 was a difficult year for retail – or more accurately, it was another difficult year for retail. In this article we take a broad view of the economic landscape on Britain’s high streets and beyond.
The Credit Crunch happened a decade ago, but it had such a devastating impact on so many businesses that it’s still a relatively clear memory for many – and although there’s been plenty of positive noises being made about the economy at various points since, it seems that today’s high street climate is no less brutal.
Throughout the last year a number of articles in the press have highlighted just how bad the situation has become. An article in the Guardian back in May 2018 even led with the fact that the current reduction of shopper numbers is more significant than in 2009, during the deepest part of the recession. And you only had to keep an eye on the news to see household names reported as in trouble, whether they were negotiating CVAs, jettisoning staff or whole stores, or going under completely – Mothercare, Carpetright, Poundworld, Toys R Us, Maplin, New Look, House of Fraser and M&S all hit the headlines last year. Towards the end of the year, high street giant Debenhams posted a record annual loss (£491.5m, against profits of £59m the previous year), and popular retail brands including Claire’s Accessories and Superdry reported they were struggling too – the former restructured and considered a CVA, while the latter posted a profit warning.
The much-vaunted saviour of the British high street – the casual dining revolution – also faltered. Whereas once we were being reassured that food would be the new leisure activity, and restaurants would be the answer to empty shops, reinvigorating city and town centres into vibrant places to be, the so-called ‘casual dining crunch’ was also in the news. The financial troubles of Byron and Jamie’s Italian have been widely reported, as have the challenges felt by Strada and Prezzo, amongst others. The huge growth in this market – coinciding with a rise in the costs of food, staffing, rent and business rates – left too many restaurants competing for too few customers, with margins squeezed beyond the realms of what the business can stand.
According to figures from retail intelligence specialists Springboard, footfall in retail parks, shopping centres and the high street was down across the board in Q3 2018, and that trend appears to have continued to the end of the year, suggesting it’s a time for caution throughout the supply chain. Businesses will need to be savvy to weather the storm. Retailers must be careful to meet the exact needs of their target customers both in terms of offering and service. Suppliers must operate with caution, taking all possible steps to protect themselves from risks such as unpaid invoices, as well as building the best possible relationships with their customers, ensuring that they can keep their finger on the pulse of the business’s ups and downs.
To find out more about our Credit Insurance and other risk mitigation solutions, and which might prove the best value for your business, please call Laura Prime on 01279 722555.