Retailers Struggle With Weather And Discounts

Tens of thousands of retailers are struggling as they head towards Christmas, due to mild weather, early discounting and price wars.

The number of UK retailers in "significant" financial hardship has risen to 24,737 in the final quarter of the year, up 2% compared to a year ago, according to insolvency specialist Begbies Traynor (LSE: BEG.L - news) .

Grocers have been hurt the most, with the number in significant financial distress up 11% to 4,226 in the quarter, compared to the same time last year.

This was blamed on the supermarket price war and people leaving this year's Christmas shopping until the last minute.

Clothing retailers have also struggled, hit by what is shaping up to be the warmest December in decades and Black Friday in November leading to early discounting of stock.

The report says that the results, taken from between 1 October and 17 December, "indicate that retailers' drastic discounting over the past month has failed to draw in the crowds".

The rise is "even more concerning given today's low inflationary environment and rising disposable incomes across the country", the survey said.

Begbies Traynor partner Julie Palmer said: "This year there has been more discounting than ever before from retailers in the run-up to Christmas, as Black Friday deals extended into more severe festive promotions to try and boost lacklustre sales volumes.

"Unfortunately the swathes of cut-price deals seem to have had little effect, with levels of financial distress among retailers even higher than last year's shocking statistics."

There is some hope, however, with the report quoting recent research predicting that last-minute Christmas shopping will see a 10% increase in buying compared with earlier this month.