In 2020 we saw a startling number of familiar high street names disappear from shop fronts, or at least diminish their high street presence. Recent research commissioned by PWC quantified this as an average of 48 UK shops in chains closing every day during 2020.
High street retail was hit hard by the coronavirus pandemic. However, this came at a time of massive structural change for retail. As the Economist’s special report on the future of shopping this week put it, “Not since the Industrial Revolution has shopping been in such upheaval”. The shift to digital is accompanied by other powerful trends- a rise in consumer activism and a re-orientation of international brands from the US and Europe to Asia.
Temporary protections against creditor winding up petitions, commercial evictions, the furlough scheme for employees and beneficial business loan terms have all offered protection for businesses. But the protection will not continue forever.
This suggests that the re-opening of the UK economy this year will, unfortunately, not be the end of the trauma for the retail sector.
While the continuation of this process of change will lead to regrettable pain to many, there will be opportunities for others. And for the existing operators, re-organisation of their business structures and strategies may be essential to survival and future success.
In our series on retail insolvency we hope to have shown how corporate restructuring techniques can help manage this process of change – whether through company voluntary arrangements to renegotiate leases of other liabilities or a more drastic pre-pack sale. This is a fast changing space and new techniques may gain in popularity. Perhaps the new restructuring plan introduced by the Corporate Insolvency and Governance Act 2020 will gain in popularity after a slow start, or simplified standard CVA terms will take the place of the main choices today. For smaller business, informal arrangements may prevail.
However, whichever procedure is chosen the process can be difficult. We note in our series a few potential pitfalls – how to capture increasingly important intellectual property and commercial contracts, managing relations with landlords and avoiding unwelcome surprises on employee liabilities. However, the problems also evolve with the flow of new law and regulation and business attitudes.
It’s not straightforward but we hope we can help many through this period of change.
Let us know what you are experiencing. We are happy to help with any issues or concerns that you may have in this area .
PWC report: Click Here
Economist: Click Here