With high street stores struggling to stay afloat, pop-up shops may have become the rising stars of the North West’s retail sector, according to research by the insolvency and restructuring trade body R3.
It shows that the number of pop-up shops and stallholder businesses in the region is now growing at a faster rate than that of e-commerce firms. In the 12 months to March 2019, there has been a 28% rise in the number of North West businesses focused on selling through stalls and markets, compared to a 19% rise in the number of e-commerce firms and a 7% rise in ‘bricks and mortar’ retailers. There are now 760 dedicated stallholder businesses in the region, up from just under 600 a year ago.
R3’s figures also show that the North West’s pop-up shops and market stalls have a lower rate of insolvency risk than either online or shop-based retailers – with 31.6% considered at higher than average risk of insolvency in the next 12 months, compared to 40.6% for high street stores and 34.3% for e-commerce firms in the region. The figures reveal that pressure on almost all retailers has eased slightly in the past six months.
Paul Barber, North West Chair of R3 and a partner at Begbies Traynor, said retailers including some luxury brands are following the example set by stall-based retailers. “Pop-up shops are a great way to trial new ideas, or to take advantage of peak-time trade in an area without being committed to a permanent presence,” he said.
“A changing array of stalls creates added interest for shoppers and gives an area a more vibrant feel. Not surprisingly, town centres and even department stores have all been creating spaces for pop-ups, and while many are independents, even high-end fashion labels are now part of the mix.
“Markets have been with us since ancient times. In recent decades, many of them had been replaced by permanent stores, but they are staging a comeback. It seems that markets and pop-up shops could be part of the future of the high street.“
The figures show while the proportion of companies at elevated risk for both bricks and mortar retailers and e-commerce firms had fallen by around half a percentage point since September 2018, stall-based retailers had fared even better, with a 1.2 percentage point fall.
Looking at retailers by types of goods sold, the percentage of shoe shops at higher than normal risk has risen by 2.6 percentage points compared with six months ago (September 2018), with 35% of shoe and leather goods stores now considered at elevated risk of failure. On a brighter note, the percentage of North West DIY and home furnishings stores at elevated risk fell by 1.8 percentage points to 41.8% over the same period, while the region’s book stores saw a fall of 3.2 percentage points, with 30.1% now considered to be at elevated risk of insolvency .
Paul Barber added: “High street retailers have been under pressure from all sides recently, and with the end of the quarter just past, when rents are traditionally due, we can expect to see some further fall-out. However, even online retailers are not immune to problems. As the retail landscape continues to shift, all businesses should continue to keep a close eye on profitability and seek expert help early on if problems arise.”
The figures are from R3’s latest insolvency risk tracker. The tracker is compiled using Bureau van Dijk’s ‘Fame’ database and measures companies’ balances sheets, director track records and other information to work out their likelihood of survival over the next 12 months.
