For most, Christmas Day brings with it joy and cheer but for some retailers, the 25th of December will have bought with it a sense of foreboding as it heralded quarterly rent day.
The past few years have seen a string of retail insolvencies either just before or just after Christmas as businesses have struggled to adjust to the changing market and consumers' growing reliance on online shopping. Zavvi, Jessops and Woolworths are among those to have hit the wall in recent years under the seasonal pressure.
With figures estimating that retailers generate around 40 per cent of their annual profit in the final quarter of the year, it's easy to see how this is such an important trading period. So when the going gets tough, the impact is swift and brutal and it is quite often the final rent day of the year that pushes struggling retailers into insolvency.
The Perfect Storm?
Now industry experts are warning that retailers in early 2016 could be facing the usual seasonal stresses and more. One of the world's largest trade credit insurers, Atradius, has suggested that retail industry could be set to experience a “fresh wave of insolvencies” in early 2016 as the “perfect storm” of conditions gathers.
Owen Bassett, senior risk underwriter at Atradius, commented: “Those who went into the fourth quarter needing – rather than wanting – a strong performance could be looking at a troubled future.
“Experience tells us that when retailers need an exceptional seasonal sales period and then hit financial difficulty, we often see failures in the first quarter. It is not unusual in this sector to be loss-making during Q1 and with the first payment of quarterly rent due in January it can be difficult to survive after a poor Q4.”
Early Discounting Storing Up Trouble
Other trade bodies, including Begbies Traynor, have warned that early discounting is also contributing to problems in the retail sector as businesses compete for customers' money in a fairly heavily saturated sector.
Partner with the firm, Julie Palmer, commented: “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 swaths 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.”
Begbies Traynor's statistics revealed that there are 24,737 retailers experiencing “significant financial distress”, an increase on last year's 24,251.
Clearly there is set to be some action in distressed retail sales as the storm aligns and those companies that just can't compete on operational efficiency are slashed. But as always, new companies will rise from the ashes of those that have hit the wall this season and it will be the distressed business buyers with their eyes on the market that spot these opportunities first who will profit from the situation.
View the latest retail businesses in administration or check out the Business Sale Report's resources to find out more about how to capitalise on distressed businesses. 
Operating across North Yorkshire, the company has two divisions, one that provides IT infrastructure and one offering renewable energy solutions, including solar PV systems and electric vehicle charging points.
The group specialises in supplying and installing UPVC windows, doors and conservatories in a wide array of styles. Bespoke bathroom panelling and high-quality guttering products are also provided by the two companies.
The company is a well-regarded specialist provider of hygienic wall, floor, and ceiling cladding systems. To complement its core supply of PVC cladding, the business offers hot welded joints to prevent the build-up of bacteria and can supply stainles...
Please choose your settings for this site below. For more information please read our Cookie Policy
These cookies are necessary for our website to function properly and provide you with access to all features.
These are analytics cookies that help us to improve the way our website works.
These are used to improve the functional performance of the website and make it easier for you to use.