Many Scottish shops and hotels at risk of going under, R3 report claims

Hundreds of retailers and hoteliers in Scotland are at risk of going out of business in the next 12 months, a new report claimed today.

Business recovery organisation R3 said that there was a “high risk” of failure for 274 retail businesses and 30 hotels in Scotland. A further 1,238 retailers and 137 hoteliers are vulnerable to failure over the same period. This means that more than a quarter of shops and nearly a fifth of hotels across the country are at some risk of failure in the next year.

The retail sector is suffering from a lack of consumer confidence as well as changes in way people buy products. The ongoing shift to online shopping is impacting retailers, many of which have not effectively moved online, Scottish R3 spokesman Iain Fraser said.

Retailers that fail to respond to the changes in the sector will cease to exist, he warned.

Compounding the problem of changing retail conditions is the poor state of the economy. Consequently, retailers offering niche or non-essential products will struggle until the economy recovers.

Meanwhile, the hospitality sector also remains vulnerable to the economic gloom because consumers can cut back on their leisure travel and business travel remains subdued. Fraser commented that hotels face the challenge of maintaining reasonable occupancy levels without heavily discounting room rates.

He believes the high capital costs involved in the hotel sector make it likely that many hotel businesses will continue to go under until the market recovers.