Retailers roll with the punches as rate of administrations fall

27th Apr 2017

Trinity Leeds Shopping Centre

While retail is generally considered a bell weather of the wider economy, it seems the high street may be managing to bare the brunt of some harsh trading conditions better than other sectors.

New research from KPMG found 28 retailers across England and Wales went into administration during the first three months of 2017. With the increase in national living wage and climbing business rates, many analysts have predicted a perfect storm for retailers as they struggle to manage the extra pressure on business.

Yet the figure marked an improvement on the 30 retailers who fell into administration for the same period a year before. And while the number of retail insolvencies fell, the number of companies across all sectors going into administration increased year-on-year. The results suggest that for once, retail may be faring better than other industries caught in economic headwinds.

Through analysis of the London Gazette, KPMG found 297 businesses in England and Wales went into administration in the first quarter of the year, compared to 277 during the same three-month period in 2016.

Household brands like Jaeger, Agent Provocateur and Jones Bookmaker all announced they would be calling in the administrators during January and March, and KPMG warned we may not have seen the last of the headline financial troubles from the sector this year.

KPMG head of restructuring Blair Nimmo said England and Wales had been “business as usual” in terms of the level of insolvencies but did warn that there could be more to come for high street chains later in the year:

“The high-profile administrations of numerous retailers seen during the first quarter of the year are good examples of how those consumer-facing businesses which are having to contend with fragile consumer confidence and rising raw material costs are coming under a degree of stress,” Nimmo added.

“There is currently a cocktail of factors causing headaches for consumer-facing businesses. Rising prices and lacklustre wage growth, coupled with high levels of household debt, is dampening consumer desire to spend.

“Simultaneously, the impact of higher import costs, the new national living wage and business rate rises are only serving to compound the squeeze.

“I wouldn’t be surprised to see few more casualties on the high street over the months ahead.”

Aside from the post-Christmas blues hit the high street every year, quarter rent days also bring their own share of stress to the sector. As many retailers pay their rent four times a year, these rent days often coincide with spates of administration announcements- the next being 24th June.

Ava Szajna

My Retail Media

News@Nine

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