Britain has seen the number of retailers on the verge of collapse rise by a quarter in the past three months according to new research by insolvency specialist Begbies Traynor (AIM:BEG).
Around 2,124 UK retailers are now classified as being in ‘critical financial distress’ between October and December 16, said Begbies, a 25% rise on the previous three months.
General retailers are the most affected with food and drug groups also seeing a sharp rise.
Julie Palmer, a partner at Begbies Traynor (AIM:BEG), said: "This year has highlighted the resilience and adaptability of some UK retailers, but the sector remains under significant strain.
"Clearly, some retailers have found ways to manage financial pressures effectively, but others, particularly in general retail, are struggling under the weight of rising operational costs and squeezed consumer spending."
Palmer noted that poor performance in "traditionally a critical month for the sector, further underscores the tough trading conditions, as consumers hold off on purchases amid low confidence and rising prices".
Boxing Day footfall across UK retail destinations dropped by 7.6% as more people shifted to online shopping.
Next PLC (LSE:NXT), which is in rude health, will again be the first of the listed retailers to reveal how it fared over the critical Christmas and New Year period with a trading statement on 7 January.
Tax rises announced by the Government in its Budget will add to the problem Palmer said.
"These changes, alongside increases to the minimum wage, will negatively impact cash flow and, consequently, we expect elevated insolvency levels across this sector during 2025."
A total of 28,747 retail businesses in the UK were in significant financial distress during the latest quarter, down from 34,494 in the same period last year.
Palmer said this year-on-year decline offered a "glimmer of hope" for the sector.
Shares in Next dropped 1.6% today to 9,684p.