Thousands of high street retailers could be facing store closures in the new year as Christmas trading failed to justify widespread holiday discounts.
It was an unimpressive trading period for a number of retailers this Christmas. Home Retail Group, Game and Bonmarche were among the big names that issued profit warnings this season, and as we move to January several may have to choose between maintaining their current high street presence and investing in their online capabilities.
“There will be blood on the floor in January, due to a big fallout from Christmas,” warned Professor Joshua Bamfield of the Centre for Retail Research.
“Household name chains could cut 100 or more of their stores to focus more online. There are a number of walking wounded. Due to constant sales many now refuse to buy items unless there are big discounts.”
Begbies Traynor said that 24,737 retailers had been left in “significant financial distress” over Christmas. Analysts at Springboard, meanwhile, said that shopper numbers were down by 9% in the run-up to Christmas, compared to last year.
A much larger number of shoppers this year looked to online stores. During Black Friday, chains such as Argos saw their websites strain and even collapse under the pressure of increased web traffic. Others, such as Amazon, reported record breaking successes, showing the value of strong ecommerce capabilities in modern retail.
“Swathes of cut price deals have had little effect," said Partner at Begbies Traynor Julie Palmer. "Any retailers without strong online offerings are in for a miserable 2016."
Companies are unlikely to release their full Christmas trading results until the new year, though given the lack of high street footfall, despite in-store deals, it is likely that, as the British Retail Consortium said, “there will be some retailers for whom the sums do not add up.”