Insurer data reveals positive outlook for retail businesses across the UK ahead of Blue Monday
As Blue Monday approaches on January 20, one of the UK’s largest credit insurers, Atradius, reveals a 24% drop in claims from UK retail businesses in December 2024 – excluding the clothing and footwear sectors.
New data highlights resilience among UK retailers, even amidst the ongoing cost-of-living crisis and the impact of the Autumn Budget. However, with the post-festive season lull and a challenging Q1 on the horizon, businesses must act swiftly to combat the retail blues.
While sub-sectors like wholesale, consumer durables, and furniture experienced rapid declines in claims, with reductions of 50%, 30%, and 25%, respectively, the picture is far less optimistic for clothing and footwear firms moving forward. These sectors saw payment defaults spike dramatically, with increases of 250% and 100% in December alone, underscoring the uneven recovery across the retail industry.
Leading retailers, including John Lewis, M&S, and Watches of Switzerland, have weathered recent economic challenges by focusing on a combination of premium product quality, strategic pricing adjustments, and a commitment to product longevity. By aligning their offerings with shifting consumer expectations while maintaining profit margins, these companies have demonstrated how adaptability can drive resilience. Despite this, the broader retail landscape remains precarious, with a record 17,349 shop closures forecast for 2025. Chains such as New Look, Shoe Zone, and The Body Shop are expected to close stores this month, reflecting the ongoing pressures facing the industry.
Ruby Hartery, senior underwriter at Atradius UK, advises retailers to adopt strategies that enhance both adaptability and resilience in the face of uncertainty. She emphasises the importance of focusing on customer service to build consumer confidence during quieter periods like Blue Monday.
“Navigating the evolving economic landscape requires agility, especially with uncertainties surrounding Labour government policies. Retailers must enhance customer service both online and in-store to build consumer confidence and overcome quieter periods like Blue Monday,” said Hartery.
She also highlighted the critical role of trade credit insurance in safeguarding businesses from financial instability.
“Securing supply chains and trade agreements is crucial during volatile times. Trade credit insurance protects businesses from payment defaults, ensuring stability amid uncertainty.”
Hartery concludes that prioritising financial resilience and implementing customer-focused strategies will position retailers to thrive throughout 2025, even in the face of ongoing challenges.
“Retailers who prioritise financial resilience and enhance customer experiences and needs will be well-positioned for success throughout the year.”
