Experts warn 'more than a quarter of Scots businesses could go bust'

Bust: R3 warned that more than 25% of shops are at risk.

Insolvency experts have warned that more than a quarter of Scottish shops could go bust in the next year.

Research by R3, the trade body for insolvency practitioners, also found that almost 20% of the country’s hotels could go out of business at the same period.

According to a report released on Monday, the group found that 274 retail businesses and 30 hotels had a high risk of going bust within the next 12 months.

Analysis showed there are a further 1238 retailers and 137 hoteliers who are vulnerable to failure over the same period.

This means that 26.15% of retail businesses and 17.99% of hotels in Scotland are at some risk of failure.

Scottish R3 spokesman Iain Fraser said: "It is not likely to surprise anyone that the retail and hospitality sectors are vulnerable. Retail, as has been widely reported, is suffering both from a lack of consumer confidence coupled with systemic changes to the way in which people buy products.

"The shift to online purchasing is greatly affecting retailers, many of which have not effectively moved online. Whilst there will always remain high street retail outlets, their composition, offerings and delivery have changed dramatically over the last ten years and will continue to do so.

"Those retailers that do not respond to these changes will, unfortunately, cease to exist."

He added: "There also remains the extremely difficult economy which, even for those businesses that are successfully adopting new technologies, poses a challenge for all businesses.

"There remains some way to go before the economy recovers and, until that time, retailers offering niche or non-essential products will face troubling times."

In the hospitality sector, hotels also face challenges in maintaining room bookings without just slashing prices, Mr Fraser said.

He continued: "Equally, the hospitality sector remains vulnerable to the economic gloom. Leisure travel can easily be curtailed and business travel remains subdued, therefore hotels face the difficult challenge of maintaining reasonable occupancy levels without simply heavily discounting rooms.

"Given that operational costs remain high this is a tricky balancing act facing many hotels and, unfortunately, given the high capital costs involved in the hotel sector, it is likely that many businesses will continue to go under until the market recovers."

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