Pressure on North West retailers has eased once again over the past quarter, making the region’s retail sector amongst the most resilient in the UK, according to new research by the insolvency and restructuring trade body R3.
The figures show that the number of ‘brick and mortar’ retailers in the region considered at higher than normal risk of insolvency fell by 0.6 percentage points to 38.7% between September and December. The North West has closed the gap slightly with London, the best performing UK region where 36.4% of physical stores are considered at above-average risk, and now ranks in third place, just behind the East of England on 38.5%.
Risk scores also fell for all the specialist types of retailers monitored by R3, including clothing stores, of which 33.6% are now at elevated risk (34.8% in September), footwear (37.3%, down from 37.6%), home furnishings (41%, down from 41.3%) and motor retailers (36.5%, down from 37.7%). Meanwhile risk scores for online and catalogue retailers fell marginally, from 34.1% in September to 33.9% in December.
Paul Barber, North West Chair of R3 and a partner at Begbies Traynor, said: “While the high street is clearly suffering, North West retailers are proving more resilient that their counterparts in some other regions. However within the region, there is still a big contrast between the cities like Manchester and Liverpool on the one hand and smaller town centres on the other.
“The slight easing in risk levels could indicate that the weakest businesses have already gone. Even so, survivors still face a tough challenge. The retail crisis is not just about competition from online or a slowdown in consumer spending – it’s a symptom of an underlying shift in our shopping and leisure habits.
“Survival – and success – will not only require careful operational management – monitoring and controlling stock, costs, and cashflow, with access to real-time financial information – but also understanding and managing that overall strategy reflected in changing customer demand. Retailers need to keep a close eye on performance and seek expert help early on if problems arise.”
The figures are from R3’s retail insolvency risk tracker, which is compiled using Bureau van Dijk’s ‘Fame’ database and measures companies’ balance sheets, director track records and other information to work out their likelihood of survival over the next 12 months.