Number of retailers going insolvent jumps to 2,195, says Mazars
The number of e-commerce insolvencies reached its highest level in five years, reaching 615 in 2023/24, an increase on the 521 insolvencies reported in the previous year
The number of insolvencies of retailers increased 19% in the past year to 2,195 in 2023/24, up from 1,843 in 2022/23, Mazars, the international audit, tax and advisory firm has found.
High profile retail insolvencies include The Body Shop in February, as well as fashion brand Ted Baker and online luxury fashion retailers MatchesFashion and Farfetch.
Mazars said that many retailers have been hit by a combination of increased costs and cautious household spending among consumers. Higher interest rates are also causing significant problems for any retailer that has a significant level of debt that is either “floating rate” or that is coming for refinancing.
Rebecca Dacre, partner at Mazars said that although inflation is moderating, retailers are still not out of the woods as many are continuing to face rising staff costs. The national living wage for over 23-year-olds is set to increase in April 2024 to £11.42 per hour. This is an increase of 9.6% on the £10.42 per hour in 2023.
Data from the ONS reveals that retail sales fell by 3.2% in December 2023, their sharpest monthly decrease since January 2021, highlighting the impact of low consumer spending on retailers.
Whilst, in recent years, brick and mortar retailers have been more heavily affected by insolvencies, e-commerce retailers have also come under severe strain from rising costs.
The number of e-commerce insolvencies reached its highest level in five years, reaching 615 in 2023/24, an increase on the 521 insolvencies reported in the previous year. As well as the insolvency of Matches Fashion and Farfetch, Wiggle the online bike retailer went into administration in October of last year.
Dacre said: “We are unlikely to see the retail sector trading comfortably until interest rates start to fall. Despite inflationary pressures easing, high interest rates and low consumer spending continue to persist. The rise in the National Living Wage is the largest on record and some face a sharp rise in business rates from April.”
