Retail business failures to continue

The recent pattern of high retail administrations and liquidations during the first quarter of each year will continue until at least 2015, a new report published today predicts. Research from both accountancy firm BDO and the Centre for Economics

and Business Research (Cebr), estimates as many as 3,067 retail & wholesale companies will fail this year, representing 12 per cent of all business failures in the country and a six per cent rise on last year for the sector.

Retailers going into administration started peaking towards the recession led year of 2009 with approximately 1000 businesses failing, but this new research predicts the trend will continue to 2015. The report stated: “Retailers face a bleak trading environment and retail failures, already projected to be higher in 2011 than 2010, are not expected to peak before 2013. Retailers have just suffered their second worst January since comparable records began in 1995 in terms of retail sales growth.”

With online sales accounting for 12 per cent of all retail trading, those businesses that do not evolve a strong multichannel presence will be most at exposed to potential failure, according to BDO.

Commenting on the report, Shay Bannon, Business Restructuring Partner at BDO, said: “There are real growth opportunities for UK companies, but the current two-speed economic recovery is more distinct than ever.

“Do not expect the economy to bounce back in the short term – and in the context of this ‘new normal’, businesses cannot afford to simply wait it out.

“Businesses that develop innovative products, distribution channels and a strong customer proposition will gain significant competitive advantage - irrespective of sector. Those who do not respond to the new normal are at greater risk of falling into difficulty.”