Q2 retail administrations fall on Jubilee ‘feel good’

THERE has been a fall in the in the number of retail businesses entering administration, latest figures from the Insolvency Service show.

The Q2 figures show the retail trade experienced an 8% reduction in the number of administrations compared to Q1 2012, with 52 businesses entering administration, compared with 57 in the first three months.

A pick-up in clothing and footwear sales over the period is thought to be one of the main drivers of the improving situation.

The extra bank holiday provided by the Diamond Jubilee celebrations and early sales and promotions are also thought to have played a part, as has the drop in inflation.

Despite 2012 witnessing a number of high profile collapses, a number of these brands are still fighting for survival through a formal process.

Clinton Cards, which was bought out of administration by American Greetings Corporation, is cited as one example. The administration deal has saved 397 of the company’s  shops  together with hundreds of jobs.

Commenting on the retail sales figures, Philip Duffy, partner at leading global financial advisory and investment banking firm, Duff & Phelps, said: “Although the recent sales figures for June were not as high as hoped, compared to the same period last year, there is an improvement of 1.6 % in sales volumes.

“Low inflation, the Jubilee celebrations and summer sales being brought forward have successfully combated challenges such as quarter rent day, poor weather and drop in footfall.

“The changing economic environment has now made it necessary for UK retailers to adapt to an evolving consumer landscape and many are working towards that change.”

He said a prime example of one traders’ market place changing dramatically is The Game Group. He said its customers are increasingly downloading and purchasing online and so have been less inclined to visit the stores. This loss of footfall has had a dramatic effect on revenues for the business.

“Bucking previous trends, the SME market fared well in June 2012 with an increase in the value of sales of 4.1% compared to June 2011, whereas the larger stores were just estimated to have an increase of 1.2%,” added Mr Duffy.

“Consumers are increasing their online shopping and are demanding a more personal and time savvy shopping experience. Those retailers that can add value as well looking to reshape their business accordingly will fare well.”