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Retail in worst shape than any UK sector 3 August 2011

Retailers are more likely than any other to be concerned about their debt levels (41 per cent), the research shows, while eight per cent of those in the retail sector say they are very likely to enter into insolvency in the next year –compared with a cross-sector average of two per cent.

The latest figures show that six in 10 (58 per cent) retailers are experiencing a decrease in profit which is 24 per cent higher than the cross sector average.

Close to half (48 per cent) of retailers have suffered a fall in sales volume, with a third (31 per cent) saying that they have seen a fall in market share. A quarter of retailers say they are having cash flow difficulties – nine per cent more than the cross-sector average.

R3 president Frances Coulson said: “The pressure on retailers is two-fold. As consumers have less money to spend, stores are discounting their prices to get people through their doors; this is at a time when inflation and rising commodity prices have increased retailers costs.

“Given the nature of the retail business, it is extremely worrying that one in four are experiencing cash flow difficulties. This suggests that many are holding a large amount of stock or have slow moving stock.”

She added that for those who are struggling, the recent quarter day will have put untold pressure on their finances and it is important that they seek advice.

The next quarter day could prove difficult for many to weather as it falls at a time when most retailers will be replenishing their stock ahead of Christmas. 

Coulson added; “Unfortunately this year cash-strapped consumers are likely to hold off until the Christmas sales before making significant purchases thus putting further strain on retailers.

“In the retail sector personnel tend to be one of the main costs to a business so the fact that retailers are not making redundancies may suggest that retailers have already reduced their head count as much as they can.”

For R3’s study, BDRC Continental conducted 502 telephone interviews with small, medium and large business owners and financial directors between June 6 and June 16 2011.

 

 

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