The Analysis News & Opinions
Opinion
Retail sales are strong, but still slowing
Covering the four weeks from 4 July to 31 July 2021: l On a Total basis, sales increased by 6.4% in July, against a growth of 3.2% in July 2020. This is below the 3-month average growth of 14.7% and the 12-month average growth of 10.4%. l On a two-year basis, Total retail sales grew by 9.1% Overall, July continued to see strong sales,
although growth has started to slow. The lifting of restrictions did not bring the anticipated in-store boost, with the wet weather leaving consumers reluctant to visit shopping destinations. Online sales remained strong, and with
weddings and other social events back on for the summer calendar, formalwear and beauty all began to see notable improvement, so fashion outlets in particular saw a bounce back to pre-pandemic levels. As many people prepare to return to the
workplace, purchase of home office equipment began to fall after months of high sales, also other homeware, such as furniture and household appliances continued to do well. However, the vacancy rate is continuing
to rise. Many shops and local communities have been battered by the pandemic, with many high streets in need of further investment. Unfortunately, the current broken business rates system continues to hold back retailers, hindering vital investment into retail innovation and the blended
physical- digital retail offering.
Helen Dickinson Chief executive, British Retail Consortium
‘SMEs will not repay Covid loans’
Two thirds (66%) of SME leaders who received financial
support from the
Government’s Covid loan schemes, say it is likely their business will default on the loan, according to new research from Nucleus Commercial Finance. This equates to 2.3 million SMEs who anticipate never repaying their loan. The anticipated default rate increases
to 75% for small businesses with 10-50 employees. The number of defaults anticipated by SMEs is significantly higher than estimates from the Office for Budget Responsibility which suggest that up to 40% of BBLS borrowers may default. With over half (51%) of SMEs receiving
financial support through the loan schemes such as CBILS, BBLS and RLS, the Government could be facing a significant shortfall, with 10% of SME leaders who received a government loan saying they would find it extremely difficult to repay their loan. Chirag Shah, CEO, Nucleus Commercial
Finance comments: “Government loans have been a vital lifeline at a time of crisis, helping SMEs to survive and start to recover from the impact of the pandemic. However, based on this insight, the government is going to be facing challenges if defaults reach these anticipated levels and businesses will require additional finance to help them get by. “Rather than leaving SMEs, who underpin
our economy, on the brink of survival, government and industry need to engage with them now to provide ongoing support and signpost them to the solutions available. It is crucial that government and industry work together to support SMEs over time as they transition their finance from these loans to other sources of finance.”
Chirag Shah Of SMEs who received a loan, nearly
two-thirds (64%) have started making repayments, 44% through their own revenue, and 21% through a loan from another source. Over a third (34%) have not started repaying their loan. This is made up of 17% who have taken a repayment holiday, 9% who have defaulted on the loan before starting repayments, and 8% who have not started making repayments yet. Sole traders were the most concerned
(30%) about having to pay back the loan, compared to 17% for medium companies (50-250 employees), 4% for small companies (10-50 employees) and 6% for micro businesses (1-9 employees). Chirag Shah, CEO, Nucleus Commercial
Finance continues: “When looking ahead, if the government
introduces new loan
schemes, technology and expertise needs to be at the forefront of the decision-making process. Making accurate and fair decisions will be vital in delivering SMEs the support they are looking for, at a speed that matches their ability to repay and creating a seamless customer experience – throughout the lifetime of the loan.”
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www.CCRMagazine.com
August 2021
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