Deloitte: UK retail administrations increase for the first time in five years
More UK retailers were at risk in 2017.
Deloitte has reported that 118 UK retailers went into administration in 2017, up 28% from 92 in 2016.
This is the first increase in the last five years, and there was a significant rise in the number of large multi-site retail administration appointments. Those administrations with more than ten stores rose from 11 in 2016 to 17 in 2017.
The 2017 numbers also indicated that retailers which have developed an effective online strategy fared better than those who still follow a traditional physical strategy.
In a statement issued yesterday (8 January), Dan Butters, restructuring services partner at Deloitte, said: “We have seen a significant increase in retail insolvencies in the last twelve months including some well-known names. We see insolvencies in higher value categories, such as furniture, as a leading indicator that falling consumer confidence, and a drop in consumer spending, is starting to bite. This has implications for retail sub-sectors with a lower price point which typically take longer to feel the impact of reduced consumer spending.
“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.”
Butters added: “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.”
