In 2025, UK consumer businesses were squeezed from both ends: inelastic price ceilings on the demand side and structural cost inflation on the supply side. Elevated borrowing costs and persistently high operating costs meant many operators couldn’t pass through costs without losing footfall, balance sheets struggled to refinance at acceptable terms, and working capital headwinds intensified further eroding already thin margins on the high street.
Against that backdrop, our review of 2025 administrations in the consumer sector (based on administrators’ proposals and SIC mapping) shows 238 administration appointments across retail, hospitality & leisure, and travel & tourism. Of these, 122 were in retail, 81 in hospitality & leisure, and 35 in travel & tourism. Retail saw a sharp increase with administrations rising by more than 37% against 2024 figures. In contrast, travel and tourism experienced a 19% decrease.
Please note that the review includes groups with multiple entities in administration; after adjusting for multi-entity group filings, we identify 199 distinct administration processes. Where several group entities failed together, we attribute the reason for administration to the lead entity’s statement.
Echoing 2024, consumer administrations in 2025 were driven by a steady grind of macro pressures including budget uncertainty, persistently weak confidence despite relatively stable disposable incomes, and operating costs that stayed high, leaving margins too thin to absorb further shocks. As cash tightened, refinancing windows narrowed. Mainstream lenders pulled back, and businesses increasingly faced higher capital costs from alternative providers or struggled to find funding.
| 2024 | 2025 | Change | |
|---|---|---|---|
|
Retail
|
77
|
122
|
58.4%
|
|
Hospitality and leisure
|
81
|
81
|
-
|
|
Travel and tourism
|
43
|
35
|
(18.6%)
|
|
Total consumer administrations
|
201
|
238
|
18.4%
|
|
Total administrations
|
1,597
|
1,495
|
(6.4%)
|
|
Proportion of consumer administrations
|
12.6%
|
15.9%
|
3.3%
|
Across the consumer economy, operating costs remained the most frequently cited trigger of distress. Sticky input inflation and structurally high fixedcost bases continued to erode margins and cash generation. Set against ongoing macro uncertainty and subdued consumer confidence, the sector stayed exposed to the same postpandemic volatility that has characterised recent years.
Beyond internal cost pressures, a notable proportion of administrations referenced disruption within their supply chains. While seldom the sole cause of failure, supplierside challenges frequently compounded preexisting financial pressure and further reduced the headroom available to management teams.
Retailers reliant on imports from overseas, particularly from China, were especially exposed to delays, cost volatility, and logistical bottlenecks appearing. Issues in this regard may force higher inventory buffers or tighter supplier credit, pulling cash into working capital at precisely the wrong time.
A recurring theme in many cases was the buildup of HMRC liabilities. As these arrears grow, they begin to shape decisionmaking in unhelpful ways, forcing management teams into shortterm fixes rather than forwardlooking planning.
These dynamics reinforce the case for early engagement on Time to Pay arrangements and proactive strategies to manage tax arrears before they crystallise into critical cashflow challenges.
The SBR recommended a 25% cut in SME tax administrative costs, citing a figure of c£25 billion being spent per year on tax compliance by small firms alone.
From an advisory perspective, we continue to help clients engage early with HMRC, structuring workable TTP arrangements, and align tax management with broader liquidity planning.
Structural issues within business models featured heavily. In numerous cases, companies were unable to exit either short or longterm lossmaking divisions, contracts, or locations, creating sustained financial drag. Similarly, failed expansion attempts, whether acquisitions, new site rollouts or postmerger integrations regularly led to cost overruns and underperformance, accelerating the path to distress. These findings highlight the need for robust planning around the risks of integration or underperforming in short term trading to ensure that any negative impact on short-to-medium term cashflow is minimised.
Increased expenditure on security was also mentioned, with retailers spending almost £5.5bn over the past five years (BRC Crime Report 2026). Although there are signs that all this investment is beginning to have an impact, based on news articles and the number of cyber-attacks in 2025, it is likely that this cost will remain high for the near future.
Some businesses cited the departure of senior personnel with specialist knowledge or critical stakeholder relationships as a material contributing factor to failure. The loss of individuals who hold a key understanding of the industry, or have operational oversight of the Company, can create immediate instability, particularly in already stressed businesses, reinforcing the need for resilient leadership structures and strong financial management capability.
The 2025 failure patterns underscore a sector contending with rigid cost bases, fragile working capital cycles and shrinking financing options, all set against uneven demand and policy uncertainty. The common thread is insufficient cash headroom leaving businesses vulnerable to relatively modest shocks, whether from supplier friction, rent and rates drag, or the buildup of HMRC arrears.
As 2026 unfolds, operators that pair disciplined cost control with robust working capital management will be best placed to restore resilience and avoid a slide into distress. Ensuring that underperforming units are addressed and that burdensome leases do not drain cash will be vital.
If you would like to understand more and hear how we can support you, then please contact Philip Stephenson for further details.
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