Research by Deloitte has revealed that the number of retailers falling into administration increased from 165 to 183 in 2011, an increase of 11%.
Despite what Deloitte describes as a “lucrative Christmas period”, administrations still increased by 27% in Q4 compared to Q3, with a total 42 retailers being taken into the hands of administrators.
Lee Manning, restructuring services partner at Deloitte, said: “2011 was a tough year for retailers and unfortunately this trend is set to continue well into 2012.
“Many retailers would have been banking on the busy Christmas period to give them a much needed sales uplift, but retailers were forced into discounting at levels last seen in the aftermath of the collapse of Lehman Brothers, putting severe pressure on margins.”
Manning warned that retail is likely to witness another spike in administrations in the first quarter of 2012 as companies struggle with VAT payments, rent and the struggle against online shopping.
“Moreover, what stands out in 2011 is the significant increase in household name retailers that have gone into administration including Barratts, Oddbins, Jane Norman, TJ Hughes and Habitat,” said Manning.
“Collectively, the plight of these companies shows the depth of the impact of the consumer recession, with more casualties anticipated as the year goes on.”
Findings from Deloitte’s recent Consumer Tracker, a new regular monitor of consumer confidence and spending habits, found that one in five households have seen a reduction in income, as a result of unemployment, loss of bonuses, reductions in overtime and increased part-time working.
“Overall, the total number of companies falling into administration in 2011 declined by 4% from 2,086 in 2010 to 2,010,” explained Manning.
“Unfortunately, we will see a growing number of companies enter administration, as fears around the Euro zone crisis and rising unemployment increase.”
This January, high street lingerie chain La Senza fell into administration and was taken over in part by Kuwait firm Alshaya.
Meanwhile, the fate of French lingerie makers Lejaby is expected to be decided today. The company was put into judicial administration late last year.