Retail administrations increase – Deloitte

THE number of retailers falling into administration in 2012 increased by 6% compared with 2011, according to research from accountants Deloitte.

Some 194 retailers entered administration in 2012, compared with 183 in 2011 and 165 in 2010.  However, there was a slight fall in the last three months of the year compared to the fourth quarter of 2011 (37 compared to 42).

Dominic Wong, restructuring services partner at Deloitte in the West Midlands, said: “These figures are a stark reminder of the difficulties which continue to face the high street. 

“Constrained household budgets and the structural challenges facing the sector mean it is certain that we will see further distress next year.  Christmas trading appears to have been reasonable, though not spectacular and not enough to prevent insolvencies in the first quarter of 2013. 

“It is also notable that high profile, nationwide chains continue to be among the casualties despite the shake-up seen in the sector since 2008.  We have seen Peacocks, La Senza, Blacks, Game, Clinton Cards, JJB Sports and Comet enter administration.

“Consumer confidence remains fragile and where we have seen some respite through lower inflation, this has not translated into increased spending with many consumers preferring to pay down existing debt or save. Strong consumer spending growth is not likely to return any time soon which makes it essential that retailers address the fundamental issues affecting the industry – store portfolios and multi-channel.”

Wong argues that while there will always be a need for physical retail space, at present too many retailers have too many stores and 2013 is likely to be marked by further closure programmes, both within and outside of formal insolvency processes. 

“Similarly, as an increasing proportion of retail sales move to online and mobile, retailers need to consider how their stores support sales across all channels by offering flexible delivery or collection options, becoming a product showroom and developing brand engagement and loyalty,” he said.

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