Scottish retail and hospitality businesses at risk of going bust

THERE are hundreds of retailers and hoteliers in Scotland who face the serious risk of going out of business in the next year, it has been claimed.

• Retail suffering from a lack of consumer confidence and changes in way people buy products

• The economy is a long way off from recovery, and as such, niche retailers face troubling times

• Hospitality sector facing challenges in maintaining bookings without slashing prices

Research from R3 shows that, over the next 12 months, 274 retailers and 30 hotels face a high risk of going bust.

It also showed a further 1,238 retailers and 137 hoteliers are vulnerable to failure over the same period.

This means that 26.15 per of retail businesses and 17.99 per cent of hotels in Scotland are at some risk of failure.

Scottish R3 spokesman Iain Fraser said: “It is not likely to surprise anyone that the retail and hospitality sectors are vulnerable.

“Retail, as has been widely reported, is suffering both from a lack of consumer confidence coupled with systemic changes to the way in which people buy products.

“The shift to online purchasing is greatly affecting retailers, many of which have not effectively moved online.

“Whilst there will always remain high street retail outlets, their composition, offerings and delivery have changed dramatically over the last ten years and will continue to do so.

“Those retailers that do not respond to these changes will, unfortunately, cease to exist.”

He added: “There also remains the extremely difficult economy which, even for those businesses that are successfully adopting new technologies, poses a challenge for all businesses.

“There remains some way to go before the economy recovers and, until that time, retailers offering niche or non-essential products will face troubling times.”

In the hospitality sector, hotels also face challenges in maintaining room bookings without just slashing prices, Mr Fraser said.

He added: “Equally, the hospitality sector remains vulnerable to the economic gloom.

“Leisure travel can easily be curtailed and business travel remains subdued, therefore hotels face the difficult challenge of maintaining reasonable occupancy levels without simply heavily discounting rooms.

“Given that operational costs remain high this is a tricky balancing act facing many hotels and, unfortunately, given the high capital costs involved in the hotel sector, it is likely that many businesses will continue to go under until the market recovers.”

The research was compiled using the Bureau van Dijk Fame database. Businesses classed as “at risk of failure” are defined as having a QuiScore below the normal band of 37-56.

The QuiScore, ranging from 0 to 100, is a measure of the likelihood of failure in the 12 months following the date of calculation. Companies with a high risk of failing would fall in the 1-18 band.