High-street insolvencies rise for first time in five years
Higher wage costs, a weaker pound and soaring business rates have hit UK retailers hard
The number of high-street casualties rose for the first time in five years in 2017, as retailers struggled with rising wage costs, a weaker pound and soaring business rates.
Fresh analysis by Deloitte has revealed the number of retailers going into administration increased by 28% last year, the first time it has risen since 2012 and the peak of the recession.
Deloitte’s Dan Butters said what was particularly worrying was the rise in insolvencies in higher-value categories such as furniture. He said this is “a leading indicator that falling consumer confidence, and a drop in consumer spending, is starting to bite”.
It also has implications for retail sub-sectors with a lower price point, which typically take longer to feel the impact of reduced consumer spending.
The Daily Telegraph reports that “there have been fresh fears about the health of the high street after department store Debenhams issued a shock profit warning last week and it was reported that House of Fraser had turned to its landlords to ask for rent reductions”.
Toys R Us narrowly avoided administration in the run-up to Christmas after a last-minute deal was agreed with the Pensions Protection Fund to reduce its rental bill by shedding up to 28 jobs.
High-street stores are struggling to deal with the twin problems of dwindling footfall and fiercer price competition as more shoppers move online.