Retail braces for mixed fortunes, says Atradius​

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The UK’s retail sector must remain vigilant to the ‘domino effect of insolvency’ after insurance data from trade credit insurer Atradius reveals domestic appliance firms’ payment defaults rose by 450%, while manufactured leisure articles were up 60%, and consumer durables by 28% year-on-year with retail stores experiencing a 43% rise in late payment in Q3 2024 alone, reflecting ongoing challenges in the sector.

Measures introduced in the Autumn Budget could both bolster and challenge the retail sector.  So far this year, nearly 7,000 shops have closed – equating to 38 closures per day – while high-profile insolvencies such as Ted Baker, The Body Shop, and Homebase, underscore the importance of financial safeguarding in an unpredictable market.

“In times of economic uncertainty, protecting supply chains and trade agreements through trade credit insurance is fundamental.  This allows businesses to mitigate the risk of payment defaults and maintain stability even in volatile market conditions,” says Ruby Hartery, Senior Underwriter, Atradius.

Despite the headwinds, the retail sector has demonstrated steady growth.  Sales volumes increased by 1% in August 2024 and by 0.3% in September 2024.  This positive momentum is set against the backdrop of a highly anticipated Black Friday, which last year generated £1.4 billion in online sales.  

Retailers are increasingly turning to innovative strategies, such as hybrid shopping and AI-driven customer experiences, to meet evolving consumer expectations.  With 74% of UK consumers citing customer service as a key factor in brand loyalty – and 48%[5] willing to pay more for quality service – retailers have a critical opportunity to differentiate through exceptional customer experiences.

The combination of government initiatives, evolving consumer expectations, and innovative retail strategies offers both challenges and opportunities for the sector.  “Retailers who prioritize financial resilience, embrace technological advancements, and enhance customer experiences will be better positioned for success.  As we approach 2025, it’s crucial for retailers to remain adaptable in navigating the shifting economic and retail landscape.  Enhancing customer service, ensuring transparency, and leveraging seasonal opportunities like Black Friday will be vital as retails gear up to capitalize on the festive season, which could provide a crucial revenue boost ahead of Q1 2025,” comments Hartery.