Fifth of UK retailers ‘fear insolvency’ as energy prices soar

More than one in five UK retailers aren’t confident they will be trading by the end of 2023, according to new research.

A study by FRP Advisory, which surveyed 250 large and mid-sized retailers across the UK, said that there are “significant concerns” surrounding the stability of retail businesses amidst the current energy crisis.

The sector is also facing other pressures including increased wholesale, labour, logistics, and warehousing costs.

60 per cent of retailers cited increased energy costs as the biggest pressure on their profit margins, while 22 per cent of respondents fear insolvency this year if the government continues with its plan to reduce relief on energy bills from April onwards.

“These are incredibly turbulent times for retailers,” said Phil Reynolds, restructuring advisory partner and retail specialist FRP. “Inflation is pushing up operating costs and dampening consumer confidence, with the looming recession likely to ensure that conditions remain challenging for some time to come.”

But he said that the sector is working hard to adapt, with the majority expecting margins to hold up through the next six months and beyond.

A further 66 per cent of retailers said that they saw an increase in operating costs last year, by 21 per cent on average.

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