Insolvency Figures Show Worrying Decline in Retail Health

Michelle Remo, “Big 4″ observer
August 07, 2012 /

The latest statistics from the Insolvency Service show more retailers entering into administration in the second quarter of 2012, compared with the same period last year.

Retail trade, which covers shops, rose 37%, with the number of retailers entering administration up from 38 appointments in Q2 2011, to 52 appointments in Q2 2012. This was a slight fall on the spike of appointments recorded last quarter for the sector (57).

Richard Fleming, UK Head of Restructuring at KPMG, commented: “This figure is a damning indication of how retail health has declined over the last 12 months. The sector remains under significant pressure from reduced consumer spending, rising overheads and all round low confidence.

“We have seen many retailers resort to slashing prices to try to encourage spending, but the long term effect of this discounting strategy will see them weakened even further. Price cutting may be a short term survival strategy, but it doesn’t tackle the underlying problems facing the sector.”

Overall administration appointments were down 20% from Q1 2012 (779) to Q2 2012 (625). This quarter’s figures showed a 10% drop in comparison to the same period this time last year (695 for Q2 2011).

The overall retail sector (including automotive and wholesale) saw a decrease of nearly 30% in administration appointments (95 for Q2 2012 to 135 for Q1 2012). However, year on year comparatives recorded an increase of 12% (85 for Q2 2011).

The real estate sector saw a drop of 29% in administration appointments (155 for Q2 2012 compared with 219 for Q1 2012). In comparison to the same period last year, this was a 36% fall in administration appointments (244 for Q2 2011).

The transport sector saw a decrease of 8% in administration appointments (23 for Q2 2012 compared with 25 for Q1 2012). The sector witnessed a decrease of 39% compared with the same period the year before (38 for Q2 2011).

The manufacturing sector saw an decrease of 10% in administration appointments (102 for Q1 2012 to 92 for Q2 2012) and appointments also decreased by 12% compared with the same period last year (104 for Q2 2011);

The hotel sector saw a decrease of 26% in administration appointments (31 for Q2 2012 compared with 42 for Q1 2012). The sector recorded a 14% drop in appointments compared with the same period for last year (36 for Q2 2011).

 

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