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  • 2018 insolvency review


    2018 in review, and some crystal ball gazing...

     What a year 2018 has been.

    The year started against the backdrop of ongoing Brexit negotiations, and continuing uncertainty about what type of Brexit would be delivered, if at all. This uncertain climate exists to this day, at the time of writing there is still no clear plan in place and we are within 100 days of the exit.

    There are two sectors that stand out for me, probably for the wrong reasons, in that they feature prominently in most of the insolvency news for the year just about to end.  Personally, I’ve handled quite a number of cases this year involved in these sectors, namely, the Retail and Hospitality sectors respectively.

    What is going on with consumers?  You tell me and we’ll both know!

    There is no doubt that consumer habits have changed and they are increasingly shopping on-line (approximately 25% of retail sales are now conducted on-line), but consumer confidence remains reasonably buoyant.  It is the mix of how consumers are shopping and spending their money that is changing.  Legacy shopping (bricks and mortar outlets) sales are decreasing and online sales (clicks) and social commerce sales are increasing.

    I’ve stated in previous articles that I foresee a shift on the high street towards a hybrid style of retailing that delivers the consumer a face to face shopping experience with the convenience of home delivery services.  Retailers need to adapt quickly to remain engaged with the consumer and provide the type of retail experience that the new style of consumer expects and demands.

    There is so much choice across retail platforms that any retailer wishing to survive cannot not ignore the need to change and adapt.  To do so requires new capital and investment, and often the assistance of a business recovery and insolvency specialist.  Many legacy retail giants have fallen by the wayside in the past year, most likely for failure to adapt quickly enough and failing to resonate with consumers in delivering the retail experience they demand.

    The other sector that is suffering markedly is that of Hospitality, in which I will include pubs and restaurants (chains as well as independents).  It appears that fierce competition for consumer spending has created challenges in driving revenue lines and acceptable profit margins in this sector.

    Consumers are spoilt for choice in terms of where to eat out and socialise but, as this type of spending is discretionary and real incomes have been stagnant for some time, hospitality operators have resorted to offering value in terms of lower process.  This “race to the bottom” is destructive, to say the least.  There have been many publicised closures and failures during the past year.  I believe there is a massive oversupply of outlets such that many operators have created unsustainable operating models.

     There is not enough surplus discretionary spending power to go around and something has to give.  Factors such as the location of the food and hospitality outlet and offering value to the consumer, as well as an enjoyable ambiance and dining experience, are paramount to the success of the venture.  Unfortunately, not every outlet is well located, nor is the food and dining experience always that great.  There is going to be some pain in any restructure plan, but it is crucial for any business owner to be aware of what is going on in their business and industry sector, and make the hard decisions that may be necessary.

    This year has been the first full year of operation for RCM Advisory and it has been a good year for us.  We have assisted many business owners and individuals to successfully restructure their businesses and affairs, by recommending and implementing change strategies for their continued success and prosperity.

    What about the outlook for 2019? Well if the past year is anything to go by, it would be foolish of me to try and guess what lays in store for us next year. The biggest issue is of course Brexit. Will it happen or not? Will it be deferred? Will it be full Brexit with no deal? Will there be an election and a change of government? Who knows? So many questions with no answers. The certainty is that all of this uncertainty is not good for business and consumer confidence. The sooner a decision is made and implemented, either way, the better, if you want my opinion. Then the world will continue to turn (hopefully) and we can all get on with life and living.

    There. Enough of the doom and gloom talk. All that remains is to thank everyone that has supported me and my firm during the past year and to wish everyone a happy, safe and merry Christmas. May 2019 be a great year for everyone with abundant health and prosperity.  Best wishes from Richard Cacho and the team at RCM Advisory.


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