UK: Retail administrations up 6% year-on-year
The number of UK retailers collapsing into administration jumped 6% in 2012 and this figure could increase further in the year ahead, according to business advisory firm Deloitte.
However, 1,833 businesses went into administration in 2012, down 9% from 2,010 last year. There was also a slight fall in the last three months of the year to 37 businesses compared to 42 in the fourth quarter of 2011.
Deloitte restructuring services partner Lee Manning 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."
Consumer confidence remains fragile, Manning emphasised, adding that where there has been some respite through lower inflation, this has not led to increased spending with many consumers choosing to pay off 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 multichannel.
"There will always be a need for physical retail space but 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."
Commenting on the findings, Jon Copestake, lead analyst at the Economist Intelligence Unit, said the figures highlight a "poor year" for the high street.
"Pre and post-Christmas sales bought some cheer, but with the sales season already largely over, there is no doubt that 2013 will be equally challenging as austerity continues to bite," he said.
Copestake added that weak confidence and the continued growth of online and mobile commerce will continue to pressure traditional formats.