Wave of eCommerce Flops Behind Record 113,700 UK Business Closures in Q2

The online retail sector that boomed in the U.K. during the pandemic has suffered from a wave of closures since the government eased COVID-19 restrictions, new figures show.

The number of retail firms shutting down rose 40% year over year in the second quarter, the Office for National Statistics said in a Thursday (July 28) report, adding that the surge was the main factor behind an 8% increase in total business closures.

“Retail sale via mail order or via internet and other retail sale not in stores, stalls or markets are the two main industries contributing to the increase in closures within retail,” the ONS said, adding that “these closures follow significant increases in creations during the second half of 2020 and the first half of 2021.”

The ONS’ data shows that the number of firms removed from its register was 113,700 in the second quarter of this year, the highest figure for the period since the series began in 2017. Ten out of 16 main industrial groups recorded an increase in removals from the register.

As PYMNTS has reported, the slowdown in eCommerce growth could affect the amount of warehouse space needed. As retailers and marketplaces expanded to meet forecasted demand, more space was made available that may end up being underutilized.

Read on: Online Shopping Slowdown Could Lead to Glut of Warehouses

Several European retailers that only operate eCommerce storefronts have seen consumer demand decline, leading companies like Zalando and Made.com to warn that profits will suffer, the Wall Street Journal reported last week (July 22).

In the U.K., consumers are also using delivery services less for online grocery shopping orders, pushing grocery delivery firm Ocado to reduce expansion plans and ponder how it will fully utilize its new facilities in England.

See more: Ocado Reels in Delivery Expansion as UK Shoppers Head to Stores

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