Written by: Keith Tully
Published: 10th January 2018
The total number of retail businesses which entered into administration over the course of 2017 was 28 per cent higher than during the previous 12 months.
That’s according to the latest data on the subject from Deloitte, which recorded 118 retail sector administrations last year and 92 in total during 2016.
Deloitte’s figures also show a notable rise of 55 per cent in the number of large scale retailers who entered administration during 2017, with the fashion company Store Twenty One and the furniture seller Multiyork among the businesses to have collapsed in recent months.
Both Store Twenty One and Multiyork had dozens of outlets across the UK but succumbed to financial problems and cash flow crises over the course of 2017.
According to Deloitte, the increase in the number of administrations among British retailers last year was the first such rise recorded over the past five years.
Administration rates across all industry sectors in England and Wales were reportedly up by just 2 per cent during 2017.
Highlighting factors that may have helped make life more difficult for retailers in recent quarters, Deloitte’s restructuring services partner Dan Butters pointed to the devaluation of Sterling, business rates increases, commodity price rises and the National Living Wage.
Mr Butters also said that he and Deloitte expect to see many of these same pressures affecting the performance of retailers into 2018 as well.
“Successful retailers over the coming months are likely to be those which have already proactively addressed the cost challenges alongside focused pricing and sourcing strategies to maximise margins,” he said.
“We also expect online retailers to continue to thrive, driven by two factors, their clear cost advantage against traditional physical retailers and the continued use of sophisticated data analytics to target consumers directly.”
Deloitte’s assessment of administration rates in the retail sector last year concluded that insolvencies in higher value areas of the market could be an indication of significant falls in consumer confidence throughout the UK.
“This has implications for retail sub-sectors with a lower price point which typically take longer to feel the impact of reduced consumer spending,” noted Mr Butters in his statements on the subject.