New research from business intelligence experts Creditsafe, has revealed that the UK retail industry has picked up dramatically in 2014, with over 7% more active limited companies businesses in operation than at the same point in 2013.
In the last 12 months, the sector has grown by almost 10,000 businesses, with over 146,000 retail operations now active – the biggest rise since the UK’s 2008 economic crisis.
Despite well publicised challenges for the major supermarket chains this year, the financial health of the sector as a whole is looking positive, with only 5.5% of the active companies operating in the industry rated by Creditsafe as very high risk or high risk. The number of companies in the highest risk banding is far lower than industries such as recruitment.
Companies engaged in the leasing of commercial retail property, reported a smaller volume of retailers attempting to renegotiate the terms of their original contract midway through the agreement compared to previous years. In 2013, 75% of companies leasing commercial space witnessed retailers attempting to renegotiate the original terms of their leases, but in 2014 this figure fell to 65%. Albeit a somewhat significant figure, the outlook is positive for the retail sector, where there is increasing stability.
Firms leasing retail properties have also witnessed a decrease in the volume of late and defaulted payments. In 2013, 59% of companies reported an increase in late and defaulted payments by retail clients, a figure that has fallen to just 18% in 2014, indicating a healthier cash flow for these businesses.
Rachel Mainwaring, Operations Director at Creditsafe UK commented:
“The last 12 months have seen a significant uplift for the retail sector after a difficult 2013. The health of the retail industry is often taken as a barometer of consumer confidence, so these figures support the argument that people are starting to open their wallets and spend. There is however, a divergence between the rate of growth in England and Scotland. The rate of expansion in Scotland is far lower on average than in England, which may indicate the referendum had an impact on business confidence and investment in this sector.”
On a regional basis, Croydon displayed remarkable growth in the retail sector in the past year, which can be expected to expand still further with Westfield/Hammerson’s £1bn redevelopment of Croydon town centre. Outside of London, Manchester has additional ammunition for its claim to be the UK’s second city with a higher number of retail start-ups than third ranked Birmingham. The research reveals that outside of Glasgow (23rd) and Edinburgh (44th) in the rankings of regional retail expansion, Scotland is experiencing limited retail growth. Scottish locations dominate the top 10 centres of retail decline and low growth in the UK.