Increasing number of retailers running into trouble

Some 183 retailers fell into administration in 2011, compared to 165 in 2010, said professional services firm Deloitte.

In the final quarter of the year, the number of administrations increased by 37 per cent to 42 compared to the previous quarter, Deloitte added.

Dan Butters, restructuring services partner for Deloitte in Yorkshire, said 2011 was a tough year for retailers and that this trend is set to continue well into 2012.

Blacks Leisure and La Senza have already confirmed they will appoint administrators.

Mr Butters added: “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.

“Moreover, what stands out in 2011 is the significant increase in household name retailers that have gone into administration including: Barratts, Oddbins, Jane Norman, TJ Hughes, Habitat and Homeform. Collectively, the plight of these companies shows the depth of the impact of the consumer recession, with more casualties anticipated as the year goes on.

“Overall, the total number of companies falling into administration in 2011 declined by four per cent from 2,086 in 2010 to 2,010. Unfortunately, we will see a growing number of companies enter administration, as fears around the euro zone crisis and rising unemployment increase.”

Elsewhere, Deloitte found that one in five households have seen a reduction in income, as a result of unemployment, loss of bonuses, reductions in overtime and increased part-time working.

Consumers were found to be cutting back across all discretionary spending categories, in an attempt to reduce costs, including 36 per cent of consumers spending less on clothing and footwear and 28 per cent on furniture and homeware.