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.

Primark exceeds expectations and plans expansion

Further Primark stores will continue to open, despite the retail giant seeing a dip in full-year profits.

However although the stores profits are thought to have fallen 8 per cent, like many of its competitors – it decided to absorb increases in costs.

The low-priced clothing store decided to absorb not only the increased rate of VAT , but also the almost doubling cotton prices.

Primark saw like for like sales increase 3 per cent – luring shoppers in by focusing on value and increasing promotions.

Despite tough times Primark’s chef executive, George Weston said there are ‘exciting’ opportunities to expand and open new outlets in all of the coutries where is trades, including Ireland, Spain, the Netherlands and Germany.

Over the past ten years Primark has doubled store numbers to 223, with 19 opening last year – 11 of these in the UK.

ABF (Associated British Foods) which also makes Twinings tea, Silver Spoon sugar and Kingsmill bread, said group profits were up 1 per cent to £920million as it benefited from higher margins in its sugar production arm.

The grocery division saw profits increase 9 per cent to £249million, driven by a strong performance from Twinings, which is the fastest growing tea brand in the United States.

Martin Deboo, an analyst at Investec, said ABF’s profits were better than the City expected, driven by a strong performance from its sugar division.

‘This reflects a difficult year by Primark’s standards, driven by margin pressure from weak consumer demand and rampant cotton prices.’

Shares rose 26p (2.3 per cent) to 1,138p after it said it expects further growth in the current year.