Retail sector crisis in UK
The U.K. is going through a serious crisis in retail sector. High street shops are closing one by one while worldwide known brands are falling into administration.
Last week Poundworld collapsed into administration, putting more than 5,000 jobs at risk after rescue talks failed. Moreover, one of the most well known retailers of the country, House of Fraser, announced plans last week to close 31 stores, putting a further 6,000 jobs at risk.
Mothercare, New Look and Carpetright are also closing dozens of outlets after creditors approved company voluntary arrangements (CVAs), which are insolvency procedures that enable them to reduce rents and shut shops.
Amid uncertainties over the Brexit process, retails are looking for a solution to stay on their feet and survive. Restaurants including Prezzo, burger chain Byron and Jamie’s Italian have also closed outlets.
There is no doubt that internet sales are also playing an important role in the closing of businesses. The latest official data shows that the share of internet sales is around 17 percent, compared to just a few years ago, when it was almost zero.
On the other hand, this year, the overall economy is expected to suffer from weak economic activity.
The British Chambers of Commerce (BCC) predicts gross domestic product (GDP) will increase 1.3 percent in 2018, a downgrade from its previous forecast of 1.4 percent. The body also trimmed its 2019 GDP outlook from 1.5 percent to 1.4.
BCC predicts that business investment growth will fall in the current year to 0.9 percent, down from 2.4 percent last year, stifled by the high upfront cost of doing business in the U.K. and continued uncertainty around Brexit.
There is no doubt that slow economic activity continues to pressure retail sales and consumer demand. Inevitably, British retailers will look for new ways to be able cut down their expenses and survive the crisis till the economy gets back on its feet and start gaining a stronger momentum.