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R3, the Association of Business Recovery Professionals, have published an interesting piece of research on the latest retail figures and the ramifications for insolvency practice. They note that, "Against a backdrop of increased living costs and falling incomes (from inflationary pressures and frozen pay) it is unsurprising that retail has suffered a 1.4% drop in sales." Their research reveals that 84% of individuals in Great Britain have made changes to their spending habits in the last year. Furthermore they note that over half of people (51%) have bought fewer non-essential items, such as clothes and DVDs and 47% have started to shop around before buying goods. Less common changes included people setting a budget to control their spending when they previously hadn’t (19%) and starting to shop in supermarkets rather than independent shops (16%).
R3 President, Francis Coulson, commented on the research as follows:
“A considerable number of people are actively trying to lower their expenditure. At this time of uncertainty it appears that the nation’s natural response has been to tread with caution and cut back where possible, this includes when shopping on the high street. The first port of call for many people seems to have been reducing their expenditure on non-essentials, whether this be cutting them out completely or switching to supermarkets, offering similar products at lower prices.”
“Many anticipated 2011 to be a tough year for the retail sector; the economic recovery is currently very sluggish and a sector dependent on consumer spend was always going to face difficulties. Retail suffered heavily during the recession, and many of the businesses that survived will have drawn heavily on their reserves to do so. A drop in sales may be a hurdle too far for some struggling businesses.”
This is a very interesting piece of work that certainly provides food for thought for insolvency professionals and other debt advisors.
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