Retail insolvencies increase by 19%

New analysis by Mazars has found that the number of insolvencies by retailers has increased 19% in the past year to 2,195 in 2023/24 up from 1,843 in 2022/23.

High profile retail insolvencies include The Body Shop in February, as well as fashion brand Ted Baker and online luxury fashion retailers MatchesFashion and Farfetch.

Cautious consumer spending, and higher interest rates have also impacted the rise. Retail sales have also dropped, with total in-store and online sales falling 2.2% in March. E-commerce insolvencies have reached their highest level in five years, with 615 reported in the past year. Despite inflation starting to moderate, retailers continue to face challenges such as high interest rates and rising staff costs. The rise in the national living wage and business rates are also concerns.

The British arm of The Body Shop has officially entered administration, casting uncertainty over 200 stores and jeopardising thousands of jobs.

Rebecca Dacre, Partner at Mazars said “We are unlikely to see the retail sector trading comfortably until interest rates start to fall. Despite inflationary pressures easing, high interest rates and low consumer spending continue to persist.

“The rise in the National Living Wage is the largest on record and some face a sharp rise in business rates from April.”