Why are UK retailers going into administration?

At this year’s London Fashion Week there was a surprise star: Marks & Spencer.

Not long ago, M&S was often considered a struggling old-fashioned chain that had lost its way. But its catwalk show lit up the annual parade of fashion’s shining lights. 

It caps a period of renewed momentum for the company, as it builds back after last year’s damaging cyber-attack. It has embarked on a smart strategy, investing in stores and creating an experience for the consumer that makes it enjoyable to visit. Shoppers tend to stay longer and buy more as a result. 

It's refreshing to reflect on a positive retail story. Times have been hard for the industry since the start of the cost-of-living crisis. 

Although consumers are willing to spend, they continue to hold back on bigger-ticket purchases, preferring to save their money. As inflation starts to creep up again, and with many people now facing higher mortgage payments, sentiment is fragile. 

Cost pressures have been mounting on firms too. National Living Wage and Employer National Insurance rises have hurt many of them – especially large employers such as supermarkets. Other additional drains on corporate bank accounts have included the need to comply with new rules including packaging regulations.

Growth areas and pressure points 

Firms that sell high-value products that consumers might consider deferrable are particularly struggling. These include the likes of home furnishings, furniture and major domestic appliances. These are items that people will wait until they’re feeling more flush to spend on. 

Women’s fashion brands have been under pressure too, in part reflecting an oversaturation of the market. Recent failures attest to this. These include upmarket fashion brand LK Bennett, which entered administration for the second time in six years in January 2026, before being partially acquired by American investment firm Gordon Brothers. Accessories chain Claire’s and fashion group Quiz also failed, in part due to competition from cheaper, online brands such as Shein and Temu. 

However, there are other standout retailers that have fared better. I've already talked about M&S as an example of a brand that - despite being perceived to be at the more expensive end of the grocery sector - has won over customers. Shoppers are happy to spend if they feel like they're getting a combination of value for money and a good experience with that spend.

Electronics seller ‌Currys and Next are also good examples. They’ve benefited from investing in the customer experience and by successfully combining online and in-store sales.

Other pockets of growth range from Korean beauty – a growing number of K-beauty boutiques are popping up across UK cities – and beauty tech ranging from Dyson’s high-end fans to Shark’s viral CryoGlow LED face mask. 

Value and experience will be important this Christmas 

We’re approaching a critical time of year for retailers: the festive spending season.

People will try to make Christmas special, but finances are under pressure and many are likely to go for low-cost options. They’ll rein in spending on gifts and items they don’t consider essential. We’re also likely to see a continued trend from branded to own-label products. Buying food from the likes of M&S is likely to win over eating out.

Much rides on Chancellor John Healey’s first Budget statement at the end of this month. If he makes any announcements that knock consumer confidence, then we will likely see an impact on Christmas sales. That would be true even for a policy not scheduled to come into effect until the start of the new tax year in April.

That’s not to say consumers will be content with just low prices. The winning formula for retailers is likely to be value for money as well as a good experience.

Looking ahead, businesses that are likely to be the most vulnerable in this climate are those that are highly leveraged and perhaps lack the capacity to reinvest.

Suppliers and wholesalers should be on the lookout for warning signs, such as payment behaviour outside the norm and requests to extend terms. It would be wise to consider credit insurance ahead of the Christmas stock-building season.