Retail insolvencies down to 2007 levels
According to PwC, insolvencies in the retail sector fell by 11% in third quarter of the year to 367
367 insolvencies was down from 412 in quarter two. This represents a 27.6% fall from the same quarter last year (Q3 2009 = 507). Retail insolvencies have fallen to the levels last seen in the 4th quarter of 2007.
Retailers counted for 11% of all companies (3313) going bust in the third quarter, up slightly from 10% of all companies in quarter two (4052).
Mark Hudson, retail and consumer leader at PwC, said,”Reduced government spending, threat of job losses, VAT increase and consumer uncertainty mean that retailers will continue to hit the wall in the next year. However, the number of retail casualties will probably dwindle because many of the weaker players were shaken out of the tree
earlier in the recession. This has left many retailers coming out of the recession more resilient, innovative and focused."
Mike Jervis, business recovery partner at PwC, said,"Whilst the current failure rate is relatively static, the overall effect of the recession is a contraction in the size of the retail property market. Voids have crept from 12% in the last year to 13% (Sept 2008 -
4.5%) with the weakest towns being in the North. (Blackpool for example has a vacancy rate of nearly 30%). The impact is that we are seeing the successful retailers gearing up their growth plans and taking advantage of the Landlord's weaker position.
"Resilience in the retail sector is partially down to a supportive lender culture and landlords are being realistic. There is still alot of pain out there and some retailers are trading on a 'week by week' basis.
"Monthly rental payments are much less unusual than they were, especially in the retail and leisure sectors. We're seeing a sea-change, particularly in new leases. Landlords are making concessions especially to owner-managed retail establishments and small retailers. Retailers are needing and demanding more and more flexibility."
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