A number of UK retailers are experiencing severe financial issues, following lacklustre Boxing Day shopping activity. In the last three months, the number of struggling retailers has risen by more than 25%, according to data from the corporate restructuring company Begbies Traynor. 

In the first 11 weeks of the last quarter of 2024, there were approximately 2,124 retailers experiencing financial stress, a slight fall from the 2,142 retailers in the same period last year, but still significantly above the 1,696 in the third quarter of 2024. 

This surge highlights the UK’s ongoing dampened consumer sentiment, as higher interest rates, soaring inflation and geopolitical uncertainty continue to take their toll. 

On the other hand, retailers are experiencing increased costs as well, especially labour and operational expenses, as well as flagging demand, as consumers shy away from spending, especially on big purchases. 

Julie Palmer, partner at Begbies Traynor, said, as reported by The Guardian: “The weaker-than-expected retail sales performance in November, 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.

“Adding to this uncertainty, the measures announced in the Autumn Budget, including the planned increase to employers’ National Insurance Contributions, will significantly dial-up the challenges faced by these businesses. 

“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. Even for more resilient businesses, the pressures remain relentless, and many will likely face financial challenges next year as they navigate these compounded difficulties.”

Dampened Boxing Day footfall deal another blow to UK retailers

UK Boxing Day retail footfall dropped -4.9% this year, across all retail destinations, compared to the same day last year, according to data by MRI Software. UK high streets saw a steeper drop in footfall, at -6.2%, compared to Boxing Day 2023, while footfall at shopping centres fell -4.2% from last year. 

Several major retailers such as John Lewis, Next, Marks & Spencer and Aldi are also typically closed on Boxing Day, further discouraging shoppers from braving cold and wet weather to snag some deals. 

Boxing Day has also seen a shift this year from being a day usually associated with massive holiday sales, to one meant for recovering from Christmas festivities, spending time with friends and family and travelling back and forth between destinations. 

The rise of bargain hunting and online shopping in recent years has also meant that more shoppers now prefer online shopping from home, instead of dealing with crowded physical stores, long queues and traffic. 

This strategy also offers shoppers far more options, while also being cheaper, quicker and more convenient. Retailers have also been offering far more numerous and steeper discounts throughout the year, but also during holidays lately, in an attempt to attract more consumers and bolster sales. 

While this has worked well in some cases, it has also meant that physical end of year sales have somewhat lost their appeal, in favour of more frequent online discounts and sales.