A ‘DAMNING’ report into the health of the retail industry has shown a dramatic increase in the number of shops going into administration.
Figures from the Insolvency Service show a 37 per cent increase in the number of shops going into administration compared to this time last year.
The past 12 months has seen the demise of Clement Joscelyn and Peacocks, both of which had stores in Bury St Edmunds, while Clinton Cards and Game were both forced to close a large number of their stores before administrators found a buyer – both brands have retained their stores in Bury.
The Insolvency Service figures for the second quarter of 2012 showed 52 retailers called in the administrators, compared to 38 in the same period last year. The first quarter of 2012 was even worse with 57 shops appointing administrators.
Richard Fleming, UK Head of Restructuring at KPMG, said: “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.”
There was some good news however with other business sectors reporting a decrease in administration – down 10 per cent compared to the same period last year and down 20 per cent from the first three months of this year.
Real Estate saw a 36 per cent fall and transport a 39 per cent fall, compared to the same period last year while administration in the manufacturing sector was down 12 per cent and 14 per cent in the hotel sector.