June 01, 2012
The number of retailers going bust has increased by 38% in the first quarter of 2012, according to research by accountancy firm, Wilkins Kennedy. It found that 670 retailers became insolvent in the first quarter of 2012 compared to 486 in the last quarter of 2011.
And the research reveals that the number of individual retail businesses becoming insolvent is up 3% on the 652 that became insolvent in the first quarter of 2011.
“The number of retail insolvencies in the first part of this year has been even higher than last year,” said Anthony Cork, partner at Wilkins Kennedy. “The double-dip has pulled the retail sector down sharply. It is hard to see consumer spending rebounding in the current environment of slow wage growth and worries over the Eurozone.”
Big names to cease trading have included Clinton Cards and the Game Group. “Creditors and the management of these businesses would have examined their sales over the critical Christmas and New Year trading period and decided they had to pull the plug,” said Cork.
He added: “Retailers are still struggling with rents that they feel are far above the market rate and banks are particularly reluctant to extend credit to struggling retail businesses.”
However, the increase also shows how many retailers have been perilously close to closing for the past two years, Cork said. “A lot of retailers have been seen as ‘zombie businesses’ since the 2009 recession because they have made enough money to service their debts but not enough to invest in solving fundamental problems with their business. These zombie retailers have been the first to go as the UK has re-entered recession.”