The UK retail sector has yet to disclose the full impact of the discounting strategy that characterised trading last Christmas. One thing is certain profits will have been cut to the bone.
The unbridled progression of internet shopping could not have come at a worse time and is posing serious questions to even the most successful retailers and their landlords. Currently the high street vacancy rate is over fourteen percent, a figure likely to rise over coming months.
There are simply too many shops and the burden of closing down unprofitable units will weigh heavily on retail profits for years to come. Despite their willingness to help, landlords have their own issues such as bank loans to support and rental income-linked banking covenants to meet. Said Gerald Irwin of Sutton Coldfield based Licensed Insolvency Practitioners and Business Advisers, Irwin Insolvency “In difficult times, there is always the temptation to cut back on investment in existing stores, but some retailers have discovered what happens when that policy goes wrong and are now suffering a massive backlash from frustrated shoppers. After all, reputations are hard to win and easy to lose when the shopping experience becomes disappointing, especially in these times when opinions are so easily shaped by social media.”
There will always be winners and losers. However, those with manageable debt levels, shops in the right location, a successful internet offering and a dedication to preserving profit margins will undoubtedly live to fight another day.