According to research carried out by Deloitte LLP, the number of retailers entering administration in the first half of 2013 fell by 30%, compared with the same period in 2012.
There is further good news in relation to the effect of administration on retail locations and employees. In 2012, 2,300 retail outlets were affected by administrations. By 2013, this number had almost halved, with only 1,400 stores being hit. The number of employees affected by insolvency in the first half of 2013 was 15,000, compared with 28,000 in the same period in 2012.
There are signs that the figures for retail insolvencies are indicative of a general improvement in the economic outlook. Administrations as a whole were also down on last year, with 816 administrations in the first half of 2013, down from 1035 in the first half of 2012. The wholesale and distribution and property and construction sectors have also seen a reduction in insolvencies, with 25% and 31% reductions in administrations respectively.
Lee Manning, partner at Deloitte, thinks that despite a number of high profile administrations since the beginning of the year, the picture is improving. He commented that “whilst the economy remains relatively flat, the retail sector has seen the weaker players fall by the wayside and as a result others are now stronger and more robust”. Mr Manning added that the national picture was borne out regionally, saying “Regional prospects are also improving as the number of retail administrations fell in every part of the UK. The sector has suffered significant pain in the past couple of years but we should take some confidence from today’s results. Retailers are better equipped to succeed in today’s tough market and we are beginning to see the sector turn a corner.”
For more information, please email sacha.pickering@michelmores.com.
