Retail failures on the up amid weak demand

Kasmira Jefford
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THE NUMBER of retailers falling into administration rose by six per cent last year as the squeeze on consumer spending and the shift of spending towards the internet saw names such as JJB and Comet disappear from the high street.

Figures published yesterday by Deloitte, the accountancy firm, show that 194 retailers fell into administration in 2012, compared with 183 in 2011 and 165 in 2010.

The number of insolvencies fell slightly to 37 in the last three months of the year compared with 42 retail failures in the third quarter.

However, Deloitte said the continued strain on household budgets and other challenges facing the sector such as costly store estates are likely to cause more grief this year.

“Christmas trading appears to have been reasonable, though not spectacular and not enough to prevent insolvencies in the first quarter of 2013,” Lee Manning, restructuring services partner at Deloitte, said.

While lower inflation has provided some relief, Manning said this had not translated into increased spending as consumers opt to save rather than spend.

“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 multichannel,” he said.

Other retailers that collapsed into administration last year included household names such as Clinton Cards, Game and Peacocks.

Despite the increase in retail insolvencies, the total number of businesses that went into administration in 2012 fell nine per cent to 1,833 compared with 2,010 last year.

There were 21 per cent fewer administrations in the hospitality and leisure sector, nine per cent less in manufacturing and seven per cent fewer in property and construction.