In Q1 2012, approximately 60 per cent of shops owned by companies that went into administration remained open after the company emerged from administration or had their leases sold onto new retailers looking for desirable locations. By Q4 2012, 30 per cent of shops remained open after administration.
Steve Burnaby, Head of Retail Agency at Colliers International explained: “The Q4 result was dominated by Comet’s administration, where there are still uncertainties around how many stores will be transferred to competitors. What is certain is that survival rate will be about half of the Q1 2012 rate as the vast majority of Comet shops become vacant when the remaining trading shops sell off inventories.”
The number of retail failures has increased to 52 for the first 11 months of 2012, from 31 in 2011, according to Colliers International. There is also a danger that with December and the ‘quarterly rent day’ left in the year, 2012 may see more retail administrations than the 2008 high, when 54 retailers fell into administration.
Jon Cookson, Head of Corporate Restructuring at Colliers International said: “A combination of weak economic growth, a decrease in real disposable income and a preference for the consumers to pay off debt has pushed the most vulnerable retailers over the edge. However, the number of stores and employees affected by administrations is down from the height of the crash by 33% and 36% respectively. Without a strong Christmas trading season this month, several early collapses of retailers in 2013 could set the tone for the full year.”