Retailers in trouble as 51 per cent of punters cut back on clothes shopping
Retail and hospitality industries continue to be bruised by the UK’s cost of living crisis as 59 per cent of people have cut their spending on eating out and a further 51 per cent have cut spending on clothing.
As Brits continue to watch their pennies amid high inflation, figures from Oxera show that in the last 12 months insolvencies of retailers have risen 56 per cent from 1,243 to 1,942.
Restaurant insolvencies have also jumped 45 per cent from 1,324 to 1,916.
This year alone, a number of prominent retailers have been wiped off the high street including Paperchase which fell into administration in January.
‘Big Four’ supermarket Tesco acquired the brand and intellectual property of Paperchase earlier this year, Paperchase products will now be sold in Tesco stores – but it’s 106 physical store will remain vacant.
“The cost of living crisis was always going to result in people cutting their spending but it’s shocking to see just how hard the retail and hospitality trades have been hit,” Robert Catherall, principal at Oxera, said.
In recent months, rising interest rates, higher costs and a stagnant economy have led to many businesses crumbling.
While inflation fell to 7.9 per cent in June, this dip has not yet been passed down to customers who have to limit the amount of money they spend on disposable goods.
Some 81 per cent of Brits now perceive eating out to be a luxury compared to 71 per cent 18 months ago.
“If the cost of living crisis continues to worsen by factors such as a rise of mortgage rates, further financial strain will be placed on homeowners and renters, particularly in the autumn when people rely more on gas and electricity,” Catherall added.
“In this case, it’s likely that consumers will cut their spending on retail even further resulting in a harder hit for the industry. Given these predictions, businesses would benefit from staying close to the evolving economic situation they are currently facing.”