Report: Retail Bankruptcy Increased In 2012

The number of retail firms filing for bankruptcy continues to grow, according to new research.

Business advisory firm Deloitte said the number of retailers falling into administration in 2012 increased by 6%, compared with 2011.

It said 194 retailers entered administration last year, compared with 183 in 2011 - up 18% from the 165 bankruptcies in 2010.

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 this year.

"Christmas trading appears to have been reasonable, though not spectacular and not enough to prevent insolvencies in the first quarter of 2013."

Deloitte said there had been a slight fall in the number of retail administrations during the last three months of 2012 compared to the fourth quarter of 2011, with bankruptcies down to 37 from 42.

Although administration proceedings across all sectors were down 9% in 2012 to 1,883, the retail sector was also noted for a number of high profile chains being hit.

"In 2012 alone we have seen Peacocks, La Senza, Blacks, Game, Clinton Cards, JJB Sports and Comet enter administration," Mr Manning said.

"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."

The outlook continues to appear bleak for the retail sector, with the move to online shopping impacting heavily on future strategy.

"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."

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