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Retail administrations up 6% last year

Published: 2 January 2013
Off the back of a year which saw 194 retail insolvencies, up 6% on 2011, early indications are that Christmas trading in 2012 was "reasonable but not spectacular" according to business advisory firm Deloitte.
Retail administrations up 6% last year
The 194 figure was a marked increase on the 183 retailers entering administration in 2011, and 165 in 2010. There was, however, a slight fall in the last three months of the year compared with the same fourth quarter of 2011. Household names among the 2012 casualties included Comet, Peacocks, La Senza, Game, Clinton Cards and JJB Sports.

"These figures are a stark reminder of the difficulties which continue to face the high street," said Deloitte restructuring services partner Lee Manning. "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."

He added: "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 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."

The total number of business administrations fell by 9% compared with last year, with retail one of the few sectors to see a rise in the number of failures, according to Deloitte. Only financial services and the mining and energy sector saw significant increases, outside of retail.

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