The Scottish retail sector had its highest ever quarter for insolvencies in the first three months of 2019 according to new analysis of the sector by leading accountants and business advisers French Duncan LLP. In Q1 28 retailers were made insolvent which is already over 40% of the entire figure for 2018 when 68 retailers entered insolvency over the year. This is the highest quarterly figure ever listed by the Insolvency Service.
Eileen Blackburn, head of Restructuring and Debt Advisory at French Duncan LLP, said: “Given that the retail sector has been experiencing steady very high numbers of business failures over a prolonged period this does not bode well for an uplift in the sector despite recently reported improved sales figures. Clearly there are major problems with retail which are not being addressed.”
“The news that the headline business rate has risen from 40.7% to 49% in less than ten years will surprise no-one in the sector who have long been campaigning for reform. For medium-sized and larger commercial premises the increase is greater from 41.4% to 51.6 resulting in an additional £13.2m in rates for retailers.”
Eileen continued: “Councils must realise that retailers cannot continue to pay these levels of charges. Equally landlords remain deaf to the calls of the retail sector to look at rentals which remain locked in an outmoded business model which is causing much of the financial distress in the sector.”
“Retail is a dynamic sector which is in constant change yet the way our High Street is taxed and levied is a throwback to an earlier era. Change needs to happen soon if we are not to see our High Streets decimated by insolvency and the closure of many familiar and well-loved shops.”
Eileen concluded: “There must be some negotiation on the part of landlords and councils to accept that if they are to continue making money from retailers they must accept and facilitate a situation where retailers can make money. Treating the retail sector as a cash cow simply doesn’t work anymore and if everyone is to benefit and ensure we have a high street in the future then councils, landlords and retailers must get together and work out a mutually beneficial system. The latest insolvency figures indicate that time may be running out.”
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