While it’s tempting to put all of the UK economic ills at the doors of Covid-19, it’s fair to say that our high streets have been struggling ever since the great recession and the relentless rise of online shopping.
However, the past 12 months for retail have undoubtedly exacerbated an already steep decline, with household names such as Debenhams, Dorothy Perkins and Burton having all entered bankruptcy from view during the last 18 months.
So, what are the challenges facing brands in the wake of the coronavirus pandemic, and how can remaining retail businesses avoid bankruptcy in 2021?
The challenges facing retail this year
Quite aside from the challenges posed by innovation and e-commerce (we’ll touch more on this later), retail firms are also suffering from the socio-economic ramifications of the coronavirus pandemic.
Make no mistake; lockdown measures and wide scale job losses have impacted greatly on the purchasing power and intent of consumers, across a wide range of demographics too.
Not only have many people lost their jobs or seen their income slashed, for example, but retired households are thought to have lost nearly 14% of their own income a year to direct taxes.
This has prompted more older citizens to utilise equity release as a way of improving their financial circumstances, highlighting the pressing need amongst this demographic to create viable levels of disposable income.
How to make your retail business bankruptcy proof
With this in mind, the question that remains is what steps can your retail business take to avoid the growing threat of bankruptcy in the current climate? Here are some ideas to keep in mind:
- Recognise the rise of e-commerce: Studies have shown that while the high street has declined, online sales in the UK grew by 74% year-on-year in January 2021. Overall, it’s thought that Covid-19 added an estimated £5.3 billion to the UK economy last year, as a growing number of retailers switched their attention online. This should definitely inform your strategy in the near-term, whether you transition your own operation online or slash prices and promote a corporeal retail experience as a way of making your offline venture more attractive.
- Forecast and manage debts: As with any business, a steady flow of cash is crucial if you’re to avoid the dreaded pitfalls of bankruptcy. To achieve this, it’s crucial that you minimise your company overheads and create a scenario where you can successfully forecast debts, as this enables you to manage your finances and determine your precise cash flow value in real-time. More specifically, you can begin to pre-empt future surges and declines in sales, managing your cash flow accordingly in the process.
Seek out low cost marketing channels: In the quest to reduce and manage costs, you should also consider accessing low-cost but high-traffic marketing channels. Out-of-home (OOH) media offers a relevant case in point, as this is an incredibly affordable and engaging medium that offers access to the mass market. Smaller retailers can therefore leverage OOH channels such as billboards to target consumers within their local area, whether they’re building brand awareness or marketing a limited-time, in-store promotional offer.