The continued fondness of East Midlanders for paper books despite strong competition from their electronic alternatives could be behind a notable upturn in the financial stability of bookshops in the region.
September figures compiled by the insolvency and restructuring body R3 show that the book retail sector was the only retail segment in the East Midlands to increase its financial stability over the past six months, with 33.8% – or one-in-three booksellers – at higher than normal risk of insolvency compared to 35.2% in March of this year.
The region’s book stores are also the only local retailers with a heightened insolvency risk below the national average for their specialism. Two-in-five – 40.6% – booksellers across the UK are at increased risk of insolvency, which is almost seven percentage points above the East Midlands statistic of 33.8%.
Compiled using Bureau Van Dijk’s Fame database, R3’s research appears to be backed up by recent news from the Publishers Association that the UK publishing industry had a record-breaking year in 2017. Total income is reported as increasing by 5% last year to £5.7bn, with income from physical book sales in the UK rising by 5% to £3.1bn.
The proportion of book sellers at elevated risk of insolvency remains high, however, and a broader look at R3’s research reveals the extent of the financial challenges still being faced by the East Midlands retail sector.
The September figures show that home furnishing stores are among the least financially stable in the region, with almost half – 44.7% – at heightened risk of insolvency, marginally above the UK average of 44.5%.
East Midlands footwear and leather goods stores are also at above average risk of insolvency in comparison to many other local retailers, with over two in five – 43.6% – struggling financially. This is almost six percentage points above the UK average of 37.8%.
Commenting on the research, R3 Midlands Chair Chris Radford, a partner at the Nottingham office of Gateley plc, said: “The retail market continues to place significant challenges on its operators, so it is particularly pleasing to see East Midlands booksellers able to capitalise on changing consumer tastes and increase their financial stability.
“Despite this glimmer of positivity, however, it is obvious that a significant proportion of retailers in the East Midlands still face an uphill financial battle – and this includes many book stores. Their struggle may not have been helped by recent changes in key overheads such as business rates and the National Minimum and Living Wage.
“For those retailers with major cash flow challenges, it is important to note that there are always several rescue and recovery options available. Timing, however, is critical. The sooner expert advice is sought from a regulated insolvency or restructuring professional, the more can be done to provide the best possible outcome.”