High street in turmoil with retailers and hospitality businesses under pressure

17 Apr 2018

Profit warnings by retailers have reached a seven year high and restaurant groups are in turmoil, as more businesses are squeezed by competitive price pressures, increased costs and consumer caution. 

Recent findings, described by experts as a “worrying omen” for the sector, show that thirteen retailers listed on the London Stock Exchange did not meet City expectations in the first quarter, and almost half have issued profit warnings in the past 12 months.

“Cyclical and structural pressures are once again colliding to reshape the UK’s high street,” a spokesperson says.  “There is still growth at home and especially abroad, however, 2018 is ­ unquestionably a less benign year for many UK companies exposed to the UK consumer economy.”

Property firm Colliers International, also published research which found that, in the past 12 months, fifteen major retailers or restaurant groups have either applied for Company Voluntary Arrangements (CVA) or gone into administration - just one less that the 16 businesses which collapsed during the worst months of the 2008-2009 financial crisis.

Head of business rates at Colliers, John Webber, explains that whilst higher wages, increasing costs and a decline in consumer confidence has heavily impacted retailers, many have also been hit hard by the recent increase in business rates.

According to UK Hospitality, pubs and restaurants alone are paying £1 billion a year more in rates than they should be because of a lag in relief from the revaluation and a drop in their rate bills - it takes five years of “transition” before they are allowed to pay their bills at the new revalued level.

Kate Nicholls, Head of UK Hospitality, says: "Restaurants are reeling from blows that have brought a dynamic, innovative sector to its knees. Hospitality helped drag the economy out of the financial crisis, creating half a million jobs since 2009, but soaring rates, inflation and limited relief have crippled many employers."

Mr Webber adds: “The fact that 10 sizeable retailers or restaurant groups have gone into ­ administration or CVA since the beginning of the year is extremely worrying. Our figures do not even include all the small independent stores that have gone to the wall too.”

In order to survive and thrive in these challenging times, business owners need accurate, reliable and timely financial information, whether that be profit or cash focused, or both, to accurately and effectively manage the company's finances and drive growth.

At Beavis Morgan, our SME retail and hospitality & leisure business experts can help you identify your requirements and then design and implement a system that will provide all the information you need, within a cost effective and efficient framework.

Being able to understand and evaluate your business through real-time information on actual performance is critical and could mean the difference between survival and business failure.

Through our partner businesses, BM Structured Finance and BM Advisory, we are able to help with sourcing and restructuring debt finance for SME businesses, as well as assisting with resolving issues which can impact on business performance and success, and finding innovative solutions for businesses and individuals in distress.

To find out more about how we can assist you and your SME business, contact Steve Govey or your usual Beavis Morgan Partner.