The inglorious 12th of January when retail liquidations begin
Flog as much as possible from Black Friday to Christmas and the Boxing day and New Year’s sales and then shut up shop while there’s cash in the till.
It may seem a crude statement but it is a truism that is not unknown in the retail and hospitality industries when consumers commit themselves to an annual spend. But by mid-January when the consumers have spent all their cash and are waiting for payday at the end of the month the boom in sales is over. Hence the inglorious twelfth of January when some retailers may be tempted to call it a day and cut their losses. This month the department store Beale’s chief executive Tony Brown said administration could lead to a restructuring of the firm implying that some of the 22 stores would close although without a buyer the department store may not survive.
This time last year Greenwoods menswear called in the administrators, as did Mahabis, Hardy Amies, Odd Bins and Bennetts while this January Debenhams and HMV are closing loss making stores and Mothercare has closed for good. For many firms in the service and manufacturing sectors the first quarter can be a boom period after the two-week shut down over Christmas and the winding down of many offices in the two or three weeks ahead of the festive period. It depends on the nature of each business sector. Clearly seaside and holiday resorts look to their golden quarters of May to September when good weather combined with school holidays gives a boost to trade while garden centres and DIY stores tend to look to the spring and summer for strong fiscal performances as householders get to work in their gardens as well as sprucing up their properties.
Looking at the statistics overall there isn’t one period when firms go bust more than others – even in the so-called golden quarter the rates of insolvencies are not much different from the other months. It is another truism that firms who rely on a good summer may well call it a day in the autumn after the schools reopen in September but there’s only anecdotal evidence to support this idea while others shut up shop before the end of their financial year.
Statistics do bare out one undeniable factor and that is when the economy does well liquidations fall while when it does badly business failures spike. As we enter 2020 there’s concern that company collapses will rise due to the stagnant state of the economy. In fact 2019 has been the worst for five years with the present trend threatening to mirror the credit crunch of 2007-8. Hopefully that won’t happen but for retailers the present decline in the high street is threatening to make every month this year have an inglorious twelfth.
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Pic: Heart. Ladies Night at Beales in Bournmouth