According to figures published from R3’s Business Distress Index – which measures the views of over 500 businesses - a quarter of retailers are experiencing some kind of cash flow difficulty while six in ten have confirmed a decrease in profitability.
The news comes ahead of tomorrow’s much-hyped ‘Quarterly Rent Day’ which is widely anticipated to push dozens of businesses into administration.
According to R3, it was the last Quarterly Rent Day which triggered administration proceedings at Habitat, Homeform and Jane Norman (pictured).
Frances Coulson, president of the trade body, said last time round, the rent day identified many retail businesses that had survived the recession, but did not have the funds to meet their rental obligations.
She added: “They had depleted their reserves to stay afloat and had no contingency plan for additional costs, unexpected outgoings or a fall in sales.
“Over the preceding three months we have seen little improvement in retail sales, economic growth or consumers increasing their expenditure. For that reason we are likely to see further retail casualties.”
Coulson explained that the pressure on retailers is two-fold.
She added: “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 costs.
“Given the nature of the retail business, it is extremely worrying that one in four is experiencing cash flow difficulties. This suggests that many are holding a large amount of stock or have slow moving stock.”