According to figures from Begbies Traynor, the total number of retailers with problems has risen 15% to 15,792 over the past year. But there has been a sharper rise, of 28% – from 1,421 to 1,816 – for web-only retailers.
“A flush of online start-ups, which are typically at higher risk of failure in the early stage of their life-cycles, has driven a significant rise in financial problems in non-store retailers,” said Julie Palmer, a Begbies partner.
“Many of these are falling victim to larger online and multi-channel competitors who offer lower prices due to greater buying power.”
Many online retailers feel pressure due to multi-channel retailers, who can appear higher in search engine results, and the dominance of online retail giant Amazon, which said it was preparing for a surge of shoppers on Christmas Day.
There are 151 British retailers facing “critical” financial problems – up 8% on the same quarter last year. This adds to other suggestions that many retailers are facing a difficult Christmas, with department stories Debenhams and Marks & Spencer both offering high levels of pre-Christmas discounting.
In contrast, however, retail stalwart John Lewis said it has experienced a last-minute surge in spending, with weekly sales of £164.4m, up almost 10% from the previous week and 4.2% from last year.
Begbies also said a 20% rise in problems among food, drink and tobacco retailers reflected the damage being inflicted on smaller shops by supermarkets expanding into their own convenience store formats.