Retail administrations skyrocket to five-year high

The number of retailers that entered administration rose 28% last year to 118, up from 92 in 2016, according to analysis from Deloitte.

This rise marks the first increase in the number of retail insolvencies in five years, and was exacerbated by a 55% jump in the number of administrations by retailers with more than 10 stores.

The number of retailers with more than 10 stores which collapsed into administration last year, which included Jager, Brantano, Jones Bootmaker and Multiyork, increased to 17 from 11 in 2016.

Deloitte attributed the spike in insolvency numbers to increased cost pressures on retailers including the national living wage, business rates and pension funding coupled with the devaluation of the pound.

Deloitte restructuring services partner Dan Butter said: “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.

“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.”

Retail was one of four business sectors to record a rise in the number of administrations last year alongside printing and publishing, recruitment and business services and wholesale and distribution.