Retail outlook continues to worsen

 

The number of retailers falling into administration in 2012 increased for the third year running, up by 6% compared with 2011, according to Deloitte.

High street woes continued throughout the last year, which resulted in 194 retailers entering administration, compared with just 183 in 2011 and 165 in 2010. However, there was a slight fall in the last three months of the year compared to the final quarter of 2011.

Lee Manning, restructuring services partner at Deloitte, said the figures were a stark reminder of the difficulties which continue to face the sector.

“Constrained household budgets and the structural challenges facing the sector mean it is certain that we will see further distress next year,” he said. “Christmas trading appears to have been reasonable, though not spectacular and not enough to prevent insolvencies in the first quarter of 2013.

Over the last year major chains such as PeacocksLa SenzaBlacksGameClinton CardsJJB Sports and Comet all entered administration. More retailers are expected to go bust this year when it becomes clear that Christmas trading and a short-lived sales boom failed to make up for another painful year.

Continued...

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ksagroup's picture

Who will be the next big retailer to fail

ksagroup | | Permalink

Who will be the next big retailer to fall?

HMV ?

JAADAMS's picture

'Financial Services' = 47

JAADAMS | | Permalink

The Deliotte text states that the number of 'Financial Services' to fail = 47. Presumably these are linked to banks and were plc's and not the smaller businesses.

Interestingly enough none of my clients have failed/gone into administration/ liquidation ...whatever....but I dont deal with many companies.

What I have noticed is that there has been an increase in the number of individual accountants setting up in my area. Is this because they have seen the 'writing on the wall' and left their bigger practices or have more of the medium sized (none plc) businesses failed meaning a reduction in work for the accountants so they have started up their own practices?

The survey does not give the number of office based firms that have failed. Go to Windsor stand with the Castle at your back on the hill and you see swathes of 'To let' signs down the High Street - not of shops but of offices.

Similarly with Woking - go there in the evening (yes.. I know you dont go to Woking by choice... but bear with me) and again none of the offices have their lights on. They cant all be being good and turning off their lights - they are empty.

What do you think?

Have many of your clients failed?

A predictable revolution    1 thanks

New Year | | Permalink

There is more to this that just the recession, although that has played it’s part.

High street retailing is under attack by the convenience of online shopping. It is also being hit by ridiculously high parking charges imposed by many short sighted councils. Fear of crime ridden car parks and theft of vehicles also plays a part.  Shopping is no longer a pleasant experience as shoppers run the gauntlet of beggers, out of control youths, and assorted undesirables on the streets.

Modern shopping centres such as Westfields are soulless boring places which all look the same and contain the same boring stores.

All of this has driven shoppers towards out of town retail parks and online shopping.

In turn retail parks have become unprofitable for many retailers like Comet due to ridiculously high rent and rates, and, due to the increasingly wide range of clothing and electrical goods now offered by supermarkets.

I think what we are seeing is a predictable revolution in people’s shopping habits, and the recession has served only to slightly hasten that process.

Mu husband and I were talking

cyrynpen | | Permalink

Mu husband and I were talking about this over the weekend and we were thinking that HMV, Argos and Blockbusters will be the next big names to fall.

Time for change's picture

Couldn't agree more with the    1 thanks

Time for change | | Permalink

last two comments.

Yes, there has been a monumental change in retail shopping habits and, yes, probably all this has been hastened by the recession. However, the current administration can't keep blaming the last one, for the present situation (we've all been aware of it, for the last 5 years now) and local councils can't keep burying their heads in the sand, as though "something will turn up".

There is no IMAGINATION in the UK at present, from what I can see. The coalition has absolutely no idea what the "end game will be" and, apart from trying to cut the deficit, seems to be swimming towards 2015 and, the next election, hoping that the electorate hasn't noticed that nothing has really changed. Local councils still persist in charging high parking tolls and, seemingly, employing SS type individuals to issue and collect hideous parking fines. Retailers also seem to have no idea and, in my locality, once premises become vacant, they are either occupied by; hairstylists, or nail and beauty studios, all competing for a never ending smaller piece of the action.

We really are desperate for leadership, in all quarters and, my prediction, if this situation is allowed to continue for very much longer, we will see not only a triple dip but, possibly, a quadruple dip recession. The economy desperately needs a kick up the jacksy and, from what I can see, none of the incumbents at Westminster (from all parties) have the first idea how to achieve that. We no longer need jaw jaw we really need some bombs up our backsides!

 

Location Location    1 thanks

andrew.hyde | | Permalink

There's an interesting theme here, around what sort of place remains as a good location for a shop - somewhere that you and I would actually enjoy shopping.  There are still such places in the UK, but perhaps they are dwindling.  Here is a list of things that I like in a shopping area, but others will have diferent preferences. It would be interesting to hear what they are:

  1. Convenience. That includes parking, but I'm quite willing to use efficient public transport and park-and-ride schemes because my second requirement is...
  2. ...Pedestrian areas.  Especially the sort of place where I can - in a rare moment when the rain stops - sit outside with a coffee and a beer and watch the world go by, while my other half has a free run at the shops she wants to visit.
  3. Interesting shops, including independents but not necessarily confined to them.  Places where they don't mind if I browse, don't hassle me, and don't expect me to use a self-checkout.  Charity shops are OK in moderation, but a row of 'Pound' shops is a sign that something's wrong.  Market stalls are OK but not burger vans.
  4. No chuggers, beggars, loud music, dog poo.

What do you like/dislike?  Which towns fit the bill/fail the test?

People like shopping

rajrajput | | Permalink

If shopping centres in Europe can remain attractive, accessible and attract large numbers week after week then the answer lies surely in the best practices that make retail a great experience in these countries. Our failing levels of customer service and employees going to work to make ends meet under the worry of closure does not make for a good experience.

Yes high parking, rent and other factors are important, online is not the only thing killing retail our failure to adapt and apply the best experience in stores does not help. If anything given we have a large grey economy which is growing and less inclined to shop online is a massive opportunity for retail. Remember your reasons for wanting to go into the centre, you want to see a good rounded mix of retail, be able to access it and leave with ease, enjoy the experience and feel you have been given value for money not just on the goods but overall experience, as paying for parking would be offset by that.

Independent retailers also are not given the support they need to excel in these times and about time we saw that!

UK’s poor productivity performance ....    1 thanks

JC | | Permalink

Naturally the answer is ....

Estimation of short dynamic panels in the presence of cross-sectional dependence and dynamic heterogeneity

http://www.bankofengland.co.uk/publications/Documents/externalmpcpapers/...

(why didn't we all think of that?)

Clearly nothing to do with a zombie economy brought about by:

  • Huge government interference to avoid recessionary impact after 2008
  • Bank bailouts (government inteference)
  • Failure of the BOE to address problems at an early stage
  • Propping up asset prices
  • Artificially low interest rates
  • Printing money
  • Robbing savers

Silly us thinking that there were obvious reasons for the problems - when in fact it was 'bayesian dynamic panel estimation', 'cross-sectional dependence and dynamic heterogeneity' as shown by 'Monte Carlo simulations'

Ah well - we live and learn

k743snx's picture

"once premises become vacant"    1 thanks

k743snx | | Permalink

"once premises become vacant, they are either occupied by; hairstylists, or nail and beauty studios, all competing for a never ending smaller piece of the action".

You forgot the tattooists, bless them.

 

High volume disguised the problem    1 thanks

winton50 | | Permalink

Until 2008 retailers were insulated to a large degree by high volumes of sales.

Landlords kept putting up rents to astronomical heights and business rates of course follow suit. This led to our town centres becoming populated purely by the same high street names and thus devoid of any difference or anything interesting in the way if independents.

These high street names then became involved in a nonsensical arms race where each followed the other round the country into big shopping centres just because their competitors were there. There really was no sensible assessment of whether the high rents PSF were economically justified.

Once high volumes dried up as consumers reigned back and credit disappeared then the casualties happened. Interestingly the slowest to react were the landlords who still to this day continue to ask stupid money for a town centre location, hence the large number of to let boards.

Sadly independents are also to blame as many of them simply didn't spot the massive change that the internet woudl bring. Ironically it has been a boon for many smaller companies who were able to move quickly and with a flash website make themselves look just as big as a FTSE100 company.

We now have a situation where councils either don't want us shoppers in the town centre or see us as cash cows so why not just go to an out of town retail park for free parking as it has exactly the same high street names as your old town centre.

how sad

Get the Margin Up!

redboam | | Permalink

The failures will multiply this year. For too long many non-food retail groups relied on high gross margins to bring home the bacon. Every time there was a downturn, no matter how small, "getting the margin up" was seen as the answer. When this became too much to bear for established suppliers of some goods, replacement products were brought in; usually of inferior quality but always carrying the same price.

Once the market had few options as the independents had largely disappeared from the high street but now a new breed of independent has emerged on the internet. Lacking the high fixed costs of prime high street or large out of town developments they will continue to skim an increasing sales from the big players by offering real value for money - something many now vulnerable high street operations abandoned long ago.

Without naming names, it would not be surprising if an early new victim for 2013 will be a well known, medium sized chain of toy shops.

 

johnjenkins's picture

Imagination,

johnjenkins | | Permalink

time for a change, no leadership etc. etc. I will add, no common sense (winter fuel payments for those that don't need it, child benefit for those earning over £50K etc.etc.) and flexibility to that.

You have to ask the question, why is it with all our experts, we can easily destroy our planet yet we can't get out of a finacial meltdown?

I do believe, though, that this year someone with a bit of courage will come to the fore (Nick are you up for it - big time?).

ksagroup's picture

borrowing boom

ksagroup | | Permalink

Many retailers simply expanded too quickly in the boom years and had too many stores.   What is more these stores were occupied on high rents.  When there was a slight downturn there was not enough flexibility in the system.  Oh and there is the internet.........

Nick - are you up for it?

john woolmore | | Permalink

Nick? Nick Clegg? Please don't make me laugh.

Until the buying public has confidence to spend, there is nothing governments etc will be able to do about the High Street situation.  This may mean that we chug along the base line until the consumer thinks it won't get any worse.

Over the past 3 recessions I have been in there has been one adage I remember:

Good Companies go forward in bad times.

Trouble is just how many good companies are there left?

Innovative, efficient, customer orientated companies will always survive and prosper.

johnjenkins's picture

John you really

johnjenkins | | Permalink

did make me laugh. I did of course mean Nick Farage.

I personally don't think we have ever got over the recession of the 90's. All we did was increase credit, sell our gold and try to get the "right" amount of tax from those that were already paying the "legal" amount.

The last recession caused so much damage, yet banks and government still haven't learned.

Yes it is their fault and they should put it right.

Nick... has he changed his name?

GSPANESER | | Permalink

johnjenkins wrote:

I did of course mean Nick Farage.

 

And I always thought he was called 'Nigel' !

johnjenkins's picture

quack quack oops

johnjenkins | | Permalink

I hope I get all my bloomers out of the way early in the year.

johnjenkins's picture

quack quack oops

johnjenkins | | Permalink

I hope I get the bloomers out of the way early in the year.

Constantly Confused's picture

Smiths

Constantly Confused | | Permalink

How is W H Smiths still going?  I worked there over a decade ago and even my young eyes could see it was trying to be everything at once (and not doing a very good job of it).  Then as part of my degree we did a case study on them, showing their 'Jack of all trades' approach would be the death of them.

I've therefore watched them with interest over the years, waiting for the collapse.  But it never came. 

If I want a book I order online or visit Waterstones if I'm feeling generous (as I then pay double).

If I want a paper I go to a newsagents.

Stationery?  Hmm, perhaps Smiths

Games?  Online/Game

Music? Well, used to be HMV, or sometimes online

 

So everyone else does everything they do but better (unless out Smiths is just a rubbish one), plus online sales will have taken a toll.  How are they still viable?

CEO - Kate Swann ..

JC | | Permalink

Almost all down to the CEO

But she is due to step down shortly - then we will see

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/882467...

johnjenkins's picture

Have you ever

johnjenkins | | Permalink

seen Smiths or HMV not busy. So what are they doing different. My guess is Rent and Rates play a large roll. Mind you there were always people in Woolworths. Wilkinson do OK and yes, of course, so do Primark. There certainly is a niche for on-line but I think food and clothes will always be bought mostly in shops.