In the final quarter of the year, the proportion of retail businesses in “critical” financial distress jumped by 25% to 2,124, driven by escalating business costs and subdued consumer confidence.

The general retail sector is experiencing the most significant pressure, with a 29% quarterly increase in businesses on the brink. Food and drug retailers also saw a 17.2% rise in those facing collapse. While a total of 28,747 retail businesses are in “significant” financial distress, this figure is slightly down from the same period last year.

Julie Palmer, a partner at Begbies Traynor, commented: “This year has highlighted the resilience and adaptability of some UK retailers, but the sector remains under significant strain.”

Boxing Day footfall figures from MRI Software further highlighted the challenges, showing a 4.9% year-on-year decline across UK retailers. High street destinations suffered the biggest drop, down 6.2%. Shopping centres and retail parks also saw declines. However, there was an 8% increase in footfall across all retail destinations on the day after Boxing Day, compared to the same date the previous year. This coincided with the reopening of large retailers following their closure on Boxing Day.

Despite the recent quarterly increase, the number of UK retailers in critical financial distress has marginally decreased compared to the fourth quarter of last year.