Retailers are bracing themselves for a difficult winter, following the collapse of online furniture retailer, Made.com and High Street fashion brand, Joules.
Both retailers have called in administrators after failing to secure additional funding to remain afloat.
Joules, which has 132 stores nationwide, is the latest retailer to suffer from reduced sales as consumer spending is squeezed by current cost of living concerns.
In a statement justifying poor trading figures just prior to entering administration, the company blamed “the challenging UK economic environment which has negatively impacted consumer confidence and disposable income”.
Meanwhile, Made.com admitted it’s financial woes had resulted from supply chain disruptions due to the pandemic, followed by overstocking just as the UK started to see an economic downturn. It is understood that High Street retailer, Next is now planning to buy Made.com’s website and intellectual property but, as yet the future of hundreds of jobs remains uncertain.
The BBC has reported that other well-known High Street names are feeling the pressure too, with Marks and Spencer warning of a “gathering storm” of higher costs for retailers and pressure on household budgets, adding that “all parts” of retail would be affected.
Luke Morgan, a Director with Palmers Solicitors, said: “The collapse of both Joules and Made.com is indicative of the inability of some larger retailers to be flexible to changing trading conditions. Rather like a juggernaut, large companies sometimes find it hard to quickly alter course when economic conditions demand a new approach.
“However, for many medium and smaller retailers, there is an opportunity to learn lessons from these failed business models.
“Business flexibility is key. It is also vital to keep a careful eye on cash flow and not endanger the business by overstocking.
“Last but certainly not least, seeking advice at the right time before things get out of hand can be the crucial difference between success and failure.”
Luke added: “As retailers feel the pinch, it is important to remember that many suppliers will also be significantly affected by the economic downturn, with late payment for goods and services becoming an increasingly common problem.
“Our expertise in this field enables us to advise businesses on commercial debt recovery, whether this is pursued by way of issuing proceedings and/or by statutory demand and petition for the winding up of a company or for the bankruptcy of an individual.”
For more information about our commercial restructuring and debt recovery services, please get in touch with out expert team.