For the retail industry, January is the biggest month for bankruptcy filings. Every year, there are many retail businesses that hope holiday sales will be able to pull them out of their cash-flow hole and boost sales and profits. Some are also burdened with a heavy load of debt. Sadly, many of these businesses do not have the liquidity to go forward without court protection and file for bankruptcy. This year, that is not the case for UK retailers.
According to reports, UK retailers successfully battled tough trading conditions in January. In a month that is typically very difficult for this industry, sales actually increased by 0.6% on a like-for-like basis from January, compared to a decrease of 0.6% for the same month in 2017. In addition, total sales rose 1.4 per cent last month, following a rise of just 0.1 per cent a year ago.
Helen Dickinson, BRC chief executive, commented that “The persisting tough trading environment played out at the start of the year with a mixed set of trading updates and subsequent announcements. Sales as well as profits are seemingly harder to come by.”
She went on to say, “Against this challenging backdrop, 2018 didn’t have a bad start during what is traditionally a lean month, with sales creeping up in line with the year’s average.”
Even though retail sales are promising, British households are still in the midst of an income squeeze, thanks to higher inflation and weaker wage growth. These conditions have left many consumers with less cash for non-essentials. While inflation is expected to ease slightly this year, there are still many pressures – like falling wages – for consumers. In regard to this situation, the BRC chief says it is essential that a Brexit transition deal is secured to provide “much needed certainty” for consumers and businesses.
“While spending on the ‘experience economy’ proved to be a natural and welcome antidote to the January blues, the dip in sentiment revealed by our consumer confidence data, allied to concerns over economic and political uncertainty, is quite telling,” says the managing director at Barclaycard, Paul Lockstone.
“It suggests that caution will continue to be the watchword for many consumers as they allocate their household budgets in the months ahead.”
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