UK retail insolvencies increase for first time in five years

By

Barbara Santamaria

Published
Jan 10, 2018

118 retailers went into administration during 2017 as falling consumer spending, economic uncertainty, the National Living Wage and costs pressures put businesses across the country at risk of collapsing.

This is a 28% increase from 92 in 2016, and represents the first increase in retail administrations in the last five years, according to data from Deloitte.

The list of retailers entering administration last year included some major fashion brands, such as upmarket clothing label Jaeger, the UK arm of German designer brand Basler and high street womenswear brand Jacques Vert.

Mounting pressures led indeed to a 55% increase in the number of multi-site retailers going into administration, as 17 retail businesses with more than 10 stores collapsed in 2017, compared to 11 in 2016.

“In January 2017 we highlighted five key cost pressures for retailers, namely the impact of the National Living Wage, Sterling devaluation, rates increases, commodity price increases and pension funding. These cost pressures will remain relevant for UK retailers as we move into 2018,” commented Dan Butters, restructuring services partner at Deloitte.

“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. 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,” he added.

Regionally, 26% of retail administrations in 2017 took place in London, followed by 22% in the North West and 20% in the South East, according to the report.