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Over one in five (22%) retailers fear their business won’t sustain the next 12 months once the government reduces relief on energy bills from April onwards, according to a new report from FRP.
Some 250 retailers across the UK were surveyed to highlight significant concerns that retailers had amid the growing energy crisis.
The report highlighted that three in five (60%) retailers cited increased energy costs as the biggest pressure on their profit margins.
Meanwhile, two-thirds of retailers have also seen a rise in operating costs in 2022, but energy continues to be retailer’s most significant concern over the next 12 months, with more than half (52%) seeing it as the biggest anticipated impact on their margins.
Phil Reynolds, restructuring advisory partner and retail specialist at FRP, said: “These are incredibly turbulent times for retailers. Inflation is pushing up operating costs and dampening consumer confidence, with the looming recession likely to ensure that conditions remain challenging for some time to come.
“However, against such a dynamic backdrop and strong headwinds, the sector is working hard to adapt – with the majority expecting margins to hold up through the next six months and beyond.”
He added: “For the still worryingly high number of businesses concerned about their future, keeping a close eye on the fundamentals – ensuring cash flow forecasts are up-to-date, and tightly managing working capital – will be critical.”
Reynolds also suggested that management teams should ensure that they have multi-level contingency plans in place for every possible scenario as, ultimately, “those that thrive will be those who can be flexible and respond positively to change.”
