Written by: Keith Tully
Reviewed: Thursday 17th January, 2013
Leading insolvency practitioner insists businesses can be rescued but must act quicker
Another week and another grim tale of high street woe paints a sorry picture for businesses across the UK – but a leading insolvency practitioner believes there is often light at the end of the tunnel for struggling firms.
Jessops, HMV and Blockbuster are the latest in a line of big-name companies to call in administrators, hot on the heels of numerous high-profile 2012 closures in Comet, JJB and Clinton Card, and forecasts suggest many more businesses are likely to experience financial trouble in the year ahead.
However, Keith Tully – Director of leading insolvency practitioners Real Business Rescue – maintains companies can often be saved from closure, thus safeguarding jobs, if they act quicker.
“The picture seems to be very much ‘doom and gloom’ at present but this is not to say that any business in the ‘at risk’ category cannot pull through and we would always urge retailers to seek help at the first sign of trouble,” Mr Tully said.
“The insolvency process clearly rings alarm bells but it can result in significant parts of the business surviving and the safeguarding of many jobs. Recent R3 (insolvency trade body) research shows that nearly 50% of jobs are surviving insolvency in the retail sector.”
Mr Tully’s claims back-up the confidence shared by HMV bosses who are “convinced” they can secure a future for the business, which employs 4,500 people and has 239 stores nationally.
HMV's administrators are currently keeping the group trading as buyers circle for scraps. This could result in the sale of some of HMV's 238 worldwide outlets to help preserve jobs among the UK workforce.
Experts have often declared the digital revolution as the common denominator behind the collapses suffered by the likes of HMV and Blockbuster, a theory supported by Neil Saunders of retail analysts Conlumino, who believes the purchase of CDs and DVDs is a dying trend and company administration was merely a matter of time.
"The bottom line is that there is no real future for physical retail in the entertainment sector," he said.
Others have pointed the finger at supermarket chains diversifying into multiple product ranges, such as selling electronic goods in-store and on their websites, backed by huge revenues streams allowing them to undercut their specialist rivals on price, effectively muscling in on business from what were once market leaders.
Councils also came in for some criticism with one analyst blaming crippling business rates and the lack of accessible parking in town centres; something supermarkets offer free of charge.
“If the councils want the high streets to do better, they need to reduce business rates for small shops and reinstate free parking. Their greed over parking fees and rates means that they lose more money in rates because half the shops have closed down. Anyone who runs a shop has to make a small fortune to pay in tax before the business pays them their first penny.”