SOLUTIONS WITHIN THE LEGAL AND OPERATIONAL TOOLKIT FOR BUSINESSES IN RETAIL (AND THE SUPPLY-CHAIN) TO ENHANCE RESILIENCE

The onset of COVID-19 has precipitated and accelerated substantial change for retailers; adding to particular headwinds already facing the sector in the UK. Restrictions on and changes to consumer preferences resulting from the pandemic have intensified the challenges facing many brick-and-mortar retailers and businesses operating in the supply chain. The Government mandated lockdown signalled immediate cash flow impacts for non-essential retailers forced to shut their stores and re-position for remote outlet channels which, in turn, has a ‘knock-on’ effect for businesses in the supply chain.

In addition, new UK legislation (the Corporate Insolvency and Governance Act 2020) brought into force in June renders ineffective the operation of a range of contractual clauses (in both new and existing supply contracts) which a supplier would commonly expect to rely on in a customer insolvency/restructuring scenario (see further details below).

There is potential for further financial distress in the coming period as government imposed restrictions seek to balance control of the virus with economic impact, temporary government support measures and tax deferral arrangements are withdrawn, and currently deferred liabilities become payable. Alongside, there is a level of uncertainty as to how consumer confidence and disposable income levels will hold up as we enter Q4 and move into 2021.

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This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.

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