Retail administrations increase across UK in 2011: Deloitte

11 April 2012 (Last Updated April 11th, 2012 02:20)

The number of retailers falling into administration in England and Wales increased 11% in 2011 to 183 from 165 in 2010, according to a study by Deloitte.

The number of retailers falling into administration in England and Wales increased 11% in 2011 to 183 from 165 in 2010, according to a study by Deloitte.

In the first quarter of 2012, a total of 69 retailers have collapsed, up from 60 in the same period the previous year.

Despite the lucrative Christmas period in the last quarter, administrations grew 27% on the previous quarter, with a total of 42 retailers falling into administration, compared to 33 in third quarter of 2011.

During the period, major retailers such as fashion chain Peacocks, lingerie firm La Senza, video games retailer Game Group and outdoor specialist Blacks Leisure have collapsed, resulting in hundreds of job losses.

The collapse of such big names in the retail industry meant the number of redundancies was likely to have been far higher than a year ago.

Deloitte restructuring services partner Lee Manning said 2011 was a tough year for retailers and unfortunately this trend is set to continue well into 2012.

"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," Manning said.

"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 4% 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."