UK retail sales saw their fastest quarterly growth in nearly four years, helped by warmer weather in March. According to the ONS, sales volumes rose by 1.6% between January and March. This is the biggest increase since July 2021, as garden centres, clothing, and DIY stores all reported stronger demand, aided by the sunnier conditions. Retail footfall in the week leading up to Easter remained broadly flat compared to the previous week. 

But while the headline figures suggest a rebound, they don’t reflect the mounting pressure facing the retail and hospitality sectors more broadly. Food sales volumes, especially at supermarkets, fell over the same period. A separate survey from GfK shows that consumer confidence took a sharp downturn in April, falling to its lowest level since November 2023. Households are still struggling with rising bills and economic uncertainty. Thanks to Trump’s latest trade tariffs, Consumer sentiment about the state of the economy sank to its lowest in at least a year at -48 in April, down from -35 in March.

This comes at a time when insolvencies in the sector are accelerating. Despite temporary boosts in sales, many businesses remain on shaky financial ground, unable to withstand higher operational costs, reduced margins, and falling footfall. The uplift in sales may prove short-lived if consumers continue to tighten their spending.

Added to this, the employers in the retail industry are facing a staffing crisis that’s adding to the sector’s vulnerability.  According to The Retail Bulletin, 63% of hourly workers plan to leave their roles within the next year, rising to 79% among 18 to 24-year-olds. 

Rigid scheduling and outdated systems are pushing talent away at a time when retention is critical. Over half of the UK’s employers cite inflexible shift patterns as a major obstacle to keeping staff, yet few have embraced tech-driven solutions to address the problem. As insolvencies rise and competition intensifies, this talent drain is becoming a serious operational and financial risk.

The momentary relief in seasonal sales spikes is not set to last. Without structural change, particularly around workforce flexibility, many may find themselves among the growing number of firms unable to keep trading in 2025.

What this means for distressed business buyers

The cracks emerging beneath the UK’s retail recovery present real upside potential for distressed business and asset buyers. Smart buyers can capitalise on this distress by keeping track of the following:

1. More assets coming to market: As insolvencies climb, so does the volume of distressed assets. Stock, equipment, property leases, and even full business operations are available at discounted valuations all across the UK. If timely decisions are taken, buyers with capital and a strategic eye can acquire valuable assets at a fraction of their original cost. 
2. Liquidated SMEs: Hundreds of small businesses file for liquidations in the UK everyday. We’ve tracked more than 70 liquidations in the last 2 weeks alone. Plus, in the current economy, sellers are more motivated to make the exit move on short timelines. This creates leverage for buyers to negotiate better terms, whether acquiring inventory, taking over retail premises, or purchasing entire operations via pre-pack administration. 
3. Restructuring opportunities: The mass exodus of younger workers and the rigidity of current employment models have left many businesses hollowed out. Buyers with operational expertise can step in, restructure with modern scheduling systems and tech-enabled workforce models. This can turn struggling stores into leaner, more flexible, and more appealing workplaces, with long-term value.
4. Brand potential at bargain prices: Well-known high street names and regional chains often enter administration due to cashflow or debt issues, not brand weakness. Acquiring such legacy businesses can give buyers the chance to revitalise trusted names with stronger management and fresh investment, fast-tracking market entry or expansion.
5. Changing consumer patterns: As customer behaviour shifts toward value, sustainability, and convenience, distressed buyers can identify underperforming businesses ripe for repositioning in growth niches, such as second-hand retail, repair services, or hyper-local delivery.

Retail News | China’s Retail Giant JD.com Sets Sights on UK Market 

Few UK shoppers may recognise the name Jingdong, but that could soon change. The Beijing-based retail powerhouse, better known globally as JD.com, is making its first serious play for the UK market. They are set to trial their online platform Joybuy ahead of a full launch by the end of 2025.

With revenues nearing $160bn (£120bn) and around 600 million customers globally, JD.com is one of the world’s largest retailers. It runs an Amazon-style everything store in China, boasting rapid next-day delivery and a vast product range. The UK version, for now, focuses on ambient groceries, alcohol, electronics, and imported Asian brands. 

Behind the scenes, JD.com has been quietly recruiting top talent from Tesco, Ocado, Amazon, Lidl, and Holland & Barrett. This could be one of the UK grocery sector’s most disruptive new entries in years as it is set to shake up the discount space. Unlike German discounters Aldi and Lidl who’ve deliberately shunned e-commerce to keep prices low, JD.com sees logistics and tech as its advantage. It’s banking on its global expertise in fast, reliable delivery to offer value and convenience to UK customers.

JD.com is already establishing European infrastructure, including a high-tech warehouse in Poland near the German border. And while the company once considered acquiring UK retailer Currys, it now seems focused on building its own brand from the ground up.

With the UK’s cost-of-living crisis forcing a rethink of value and convenience, the timing could work in JD’s favour. Struggling retailers should stay prepared to face a fresh wave of disruption. In a climate where insolvencies are already rising, mid-tier and discount retailers without strong online infrastructure may be pushed to the brink, while investors and buyers of distressed assets could find new opportunities amid the fallout. JD.com’s arrival isn’t just another market entry; it’s a catalyst for major structural shake-up.

Insolvency News | Hobbycraft Faces Turbulent Restructuring

Hobbycraft could shut as many as 27 stores within weeks as part of a sweeping restructuring. This is led by new owner Modella Capital, the private equity firm that recently acquired WH Smith’s high street arm.

The arts and crafts chain, which operates more than 100 stores across the UK, has already confirmed nine closures by July. This puts more than 125 jobs on the line. A further 18 branches remain under threat, dependent on whether Modella can negotiate rent reductions with landlords. If unsuccessful, that could trigger over 150 additional redundancies.

CEO Alex Wilson acknowledged the difficulty of the situation, noting that while Hobbycraft has a strong presence and loyal customer base, it has not been immune to the pressures facing the wider retail sector.

Modella, known for acquiring distressed high street brands, purchased 480 WH Smith high street locations last month in a £76 million deal, rebranding the chain as “TG Jones” and signalling the end of the WH Smith name on Britain’s high streets after 233 years. The firm is also reportedly planning a Company Voluntary Arrangement (CVA) for Hobbycraft. This is an insolvency mechanism often used to renegotiate leases and reduce costs.

The news comes amid a brutal period for UK retail, with 13,000 stores closing in 2024 alone and nearly 170,000 jobs lost. As Modella continues its aggressive restructuring play, there are growing concerns that the once-thriving Hobbycraft brand may become the latest casualty of a sector in crisis.

To find out more insights about the UK’s insolvency market, stay tuned to Administration List.