Retail outlets are facing a series of potentially damaging New Year financial demands
Retail outlets are facing a series of potentially damaging New Year financial demands, according to a leading corporate recovery and business advisory expert.
Carl Jackson, managing partner at Quantuma, said the pressures ranged from increasing wages to pensions, and from rising business rates to online shopping.
He said a seasonal burden was unwanted Christmas stock as January sales come to end, while others included rising rents and prices, and the weak pound.
And Mr Jackson explained that in some cases this collection of demands was pushing retailers’ finances to the limit – potentially resulting in business insolvencies.
Mr Jackson said: “Retailers typically employ people on hourly wages based on the minimum wage, which is currently £7.83, and so ongoing demands to apply the National Living Wage of £8.75 an hour will have a significant impact on payroll costs.
“Linked to this is the forthcoming implementation of pension auto-enrolment for staff, with a deadline of this February, which also increases the cost burden on retailers.”
Staff are not the only extra cost burdens, according to Mr Jackson, who also highlighted the business rates revaluations from last April which have resulted in many smaller retailers facing significant hikes, sometimes making individual shops untenable.
He said: “As well as rising business rates, so-called ‘smart shopping’ online is creating extra issues for ‘bricks and mortar’ retailers, with consumers increasingly using shops only to inspect potential purchases and then purchasing them online at lower prices.
“Allied to this is the pressure of rent-negotiations on those shops, which many retailers just cannot afford.”
Another financial burden hitting some retailers is unwanted stock if they have over-estimated Christmas demand, Mr Jackson said.
“Getting your pitch wrong can cause significant issues and leave a retailer with unwanted stock which it may now need to shift at less than cost value,” he explained.
“Meanwhile, retailers with a reliance on haulage to deliver their stock are also facing the extra burden of rising fuel and commodity costs.”
As if there aren’t enough problems for retailers to worry about, Mr Jackson said that they were also facing the negative results of what has been a weaker pound since the vote for Brexit.
He added: “The weaker pound has significantly increased import costs for smaller retailers bringing in stock from abroad, and the same Brexit uncertainty has also damaged consumer confidence and generally created uncertainty in the marketplace.”
Ends (395 words)
For further information, please contact:
Steve Dyson, Associate Director, ASAP PR – 0781 8004575
Marie Wadeson, Head of Marketing,
Quantuma LLP, Vernon House, 23 Sicilian Avenue, London, WC1A 2QS
Tel: 07464 545678
Notes to Editors
Quantuma LLP is a leading corporate recovery and business advisory practice delivering partner-led solutions to businesses and individuals facing financial distress with offices in London, Southampton, Marlow, Watford, Brighton, Bristol, Manchester and Birmingham.