Research by Deloitte shows that the number of UK retailers that went into administration in 2018 rose by 6% to 125, but the number of company voluntary arrangements (CVA) spiked as retailers and businesses struggled with online competition.
Accountancy Daily reports the number of retailers entering into CVAs increased by 52%, from 25 in 2017 to 38 in 2018, and there was an 18% increase across all industry sectors in CVAs. The number of large multi-site retailers with more than 10 stores increased from two in 2017 to 13 in 2018. CVAs by bars, hotels and restaurants increased by four times to 36.
The majority of business sectors reported an increase in administrations between 2017 and 2018, with the number of retailers entering into administration in 2018 rising by 6% to 125 – compared to 118 in 2017. However, several sectors saw a fall in administrations, including printing and publishing (-21%) and recruitment and business services (-10%).
Dan Butters, partner and head of restructuring services at Deloitte, said: ‘Notwithstanding the increase in overall retail insolvencies, we have seen a significant increase in large retail insolvencies and CVAs in the last 12 months. 2018 saw some high-profile retail casualties and a continued deterioration in trading conditions for retailers in the final quarter of the year.
‘Consumer confidence fell in the third quarter of 2018, which, combined with inflation-driven pressure on disposable incomes, has contributed to twelve consecutive months of declining footfall. The rapid decline in the performance of the high street has driven bricks and mortar retailers to increase their levels of discounting to counter this.
‘This comes as retailers continued to face increasing staff and property costs, and a weaker Sterling. Online retailers however have fared better, accounting for a record 21.5% of all UK retail sales in November.’