UK: MORE RETAILERS SET TO FALL INTO ADMINISTRATION

The total number of retailers in England and Wales falling into administration increased by 11% during 2011 to 183, with further troubles ahead, according to research from consultancy firm Deloitte. Findings from Deloitte’s recent Consumer Tracker, which monitors consumer confidence and spending habits, found that 36% of consumers are spending less on clothing and footwear in an attempt to reduce costs.

The company said today  that despite the last quarter including the lucrative Christmas period, administrations were up 27% on the previous quarter. A total of 42 retailers fell into administration during the fourth-quarter, compared with 33 in the third-quarter.

“2011 was a tough year for retailers and unfortunately this trend is set to continue well into 2012,” said Lee Manning, Deloitte restructuring services partner. ”Many retailers would have been banking on the busy Christmas period to give them a much needed sales uplift, but retailers were forced into discounting at levels last seen in the aftermath of the collapse of Lehman Brothers, putting severe pressure on margins. We are likely to see a further spike in retail administrations in Q1 2012 as retailers buckle under the pressure of VAT payments falling due, impending rent payments, the increased popularity of shopping online and the traditional decline in footfall as the attractive year end sale offers come to an end.”

Commenting on the study’s findings, British Retail Consortium director general Stephen Robertson said that the next few months are “bound to be quieter” as consumers rein in their spending after Christmas. ”Retailers are doing their bit by controlling their own costs and keeping prices down for customers despite steep increases in transport and utility bills. The UK’s governments need to support the sector’s efforts to survive, thrive and maintain jobs by holding back the costs for which they are responsible, including business rates, retail levies and the burden of regulation,” he said.

Robertson added that while retailers “don’t ask for handouts”, they do deserve help “overcoming some of the barriers to business success,” highlighting that retail is the private sector’s biggest employer and a major source of jobs for under 25s.