There has been a 2464.5% increase in bad debt owed to UK retailers in the last three months, according to credit report company Creditsafe’s quarterly Watchdog Report.
This has been a rise of more than £51.5m, bringing the total to £53.6m and the firm has said that the debt is set to increase putting further pressure on retail businesses.
The report also showed that the number of company insolvencies from the UK’s retail sector had increased by 59.4% over the past year. Failures in the second quarter of 2018 totalled 416, a significant increase from the same quarter in 2017, where 261 failures were recorded.
The largest company to go under during the last quarter by turnover was Poundworld, after being unsuccessful in finding a buyer to rescue it from collapse. Just recently, Debenhams had to deny it was having cash problems after several of its insurers reduced cover to its suppliers.
In contrast, 11,475 new companies were created in Q2 2018, a sizable increase of 40.3% compared to the same period a year ago when 8,180 new businesses were formed. Meanwhile, the fastest growing outlets from the UK’s retail sector between the last two quarters include ASDA, Iceland and Ocado, suggesting consumers are increasingly choosing to do most of their groceries shopping at larger outlets.
Chris Robertson, UK CEO at Creditsafe, said: “2018 is proving to be an extremely difficult year for the UK high street, with many well-known chains unable to cope with increasing numbers of consumers visiting larger stores and turning to online shopping. The growing number of job losses and empty shops right across Britain is a big cause for concern.
“Nevertheless, it’s promising to see the resilience of entrepreneurs in deciding to open up new businesses in the face of uncertain and changing market conditions. It’s this positive attitude that will be needed to see the retail sector through this tough period.”