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More retailer failures on the way, warns Grant Thornton

Published:  08 February, 2011

Government statistics show retailer insolvencies slowed in the final quarter of 2010, but the rate could rise again

The number of retail and wholesale administrations seen in Q4 2010 showed a clear year-on-year decline, with numbers down by 39 per cent. The number of CVAs on a year on year basis remained constant at 22.

The latest figures also show a drop of 18 per cent on the previous quarter. Barry Knight, head of retail at finance and business advisors Grant Thornton said: “This is encouraging and shows that the sector is moving in the right direction for now, particularly in the light of a shrinking economy and adverse weather conditions towards the end of the last quarter, which kept many shoppers off the high street.

But he warned: "There is however, no room for complacency as retailers will still face very difficult conditions in the year ahead, and this might be the lull before the storm.

"The UK economy is still volatile and there is a risk we could see an increase in business failures in 2011. Pressures from high inflation, particularly in relation to commodity prices, the VAT increase, a looming rise in National Insurance contributions and a potential hike in interest rates, combined with falling consumer confidence, are bound to take their toll.”