Survival strategies for struggling retail businesses

The British retail sector was hit by lower-than-expected footfall in December according to the British Retail Consortium’s (BRC) Sensormatic IQ Footfall Monitor report.

Statistics show that year on year total UK footfall in retail decreased by 2.2%, high street footfall by 2.7%, and shopping centre footfall by 3.3%, while retail park footfall remained unchanged.

BRC chief executive Helen Dickinson OBE said the data capped a disappointing year overall for footfall in Britain, adding it’s the second year in a row where decline has been noted. “High streets and shopping centres were hit particularly hard throughout the year as people veered towards retail parks to take advantage of free parking and the variety of larger stores,” Helen said.

“Even the ‘golden quarter’, typically the peak of shopping activity, provided little relief, with footfall down over the period,” she continued, adding that while Black Friday weekend was more promising, this was “overshadowed” by a “lacklustre” festive season.

Retail consultant, Andy Sumpter, of Sensormatic added that while December saw some flurries of festive footfall around key trading days “overall, the picture was filled with much less sparkle as shopper traffic remained subdued”.

Stores will now need to look afresh to 2025, Andy said, charting “a course to adopt innovative strategies to reverse this trend, or maximise the sales potential of fewer visitors, finding new ways to make each store visit count”.

“Shopping habits have been changing fast, and customers are increasingly looking for more experiential shopping, as well as a variety of cafes, services and things to do,” continued Helen. “Unfortunately, investment in town centres and high streets is held back by our outdated business rates system, which penalises town and city centres.”

Speaking after the report was issued, Helen said the Government’s proposals to reform these rates could ease the burden, but added it’s vital no shop ends up paying more in rates than before.

The British Independent Retailers Association (Bira) agreed the figures show the mounting pressure on independent businesses, saying it’s concerned about the implications they will have in 2025 as costs continue to rise.

CEO, Andrew Goodacre, said the decline is particularly worrying as the Christmas period is typically when retailers need to generate revenue that will see them through the quieter months ahead, and agreed with Helen that action from Government is vital to help the sector as it navigates 2025.

“With retailers facing increases in National Insurance contributions, National Living Wage, and business rates, many independent stores will struggle to maintain viability. We urgently call on the Government to reconsider the planned business rates increase for small retailers – this could be the difference between survival and closure for many.”

5 expert tips to help your business survive difficult trading conditions

Kyle Eaton of money.co.uk, says there are several things retail businesses can do to get 2025 off to the better footing.

1. Negotiate with suppliers: “You can often negotiate with suppliers to secure a better deal. Remember they will be bearing the costs of the cost-of-living crisis too, and will be looking to secure their business rather than maximise their profits. Many suppliers may be open to renegotiating deals to keep you as a customer rather than risk losing you to their competition during these tough times. Get multiple quotes from other suppliers and be prepared to walk away if necessary.

2. Review technology: “In good times many businesses can find themselves lulled into the excitement of experimenting with new technologies such as software to streamline workflows or new equipment to increase productivity. In reality, however, there may be some tech that is costing a little more than the increased value it is providing your businesses. If the tech is useful, by all means keep it, but while sales are down, it might be a good time to review your outgoings to see where you can make savings.”

3. Look at your expenses: “If reduced business has your wallet strapped, there could be some small company spending you can cut to help alleviate these costs, such as excessive office energy use. Reviewing these small costs could save you a considerable chunk of cash.”

4. Create or review a financial plan: “A financial plan makes you take inventory of how your business currently stands, where it has come from, and where you are aiming it to be. This can help you get the bigger picture in mind and not make rash decisions in a financial pinch. Reviewing your plan is useful when business is good too.”

5. Maximise tax deductions: “All business owners should also have on their mind any crucial tax deductions they could be entitled too. Many businesses already know they can deduct a portion of their rent and utilities as an expense, but some often miss out on many other tax-deductible expenses. Travel costs, clothing expenses (uniforms and safety), staffing costs, and even things you buy to sell on. Examples such as these can be claimed as allowable expenses in the UK.”