2012 could see more big name retailers fall

Retail administration has been big news in the first few months of 2012, with Game and Blacks just two of the major firms we've seen fold.

La Senza, Blacks and Past Times also hit the headlines as the number of retailers falling into administration during the first quarter of the year increased by 64 per cent in comparison to the final three months of 2011.

Woolworths was one of the first major high street names to go into administration, back in 2008. Little did we know how long-lasting the effects of the recession would be. Fast forward to 2012 and it's clear that we're not out of the storm just yet.

Research from Deloitte suggests that some retailers may have to reduce their property portfolios by up to 40 per cent in the next five years in order to adapt to the changing demands of their consumers. This is likely to come with substantial job losses, delivering a blow to the economy during this fragile time of recovery.

Lee Manning, restructuring services partner at Deloitte, observed that one of the main triggers behind the administration of retailers is the fact that their resources have been over-stretched by having too many marginal stores. “As online retailing continues to grow whilst overall spending is weak, the fixed costs and poor performance of some stores drags on the overall business,” he added.

Here at the Business Sale Report we've also witnessed this trend as bigger and bigger names fail to keep up with the market. Of course, administrations aren't simple and the fall-out can be tough to deal with. But for those on the ball, they also offer a great deal of opportunity.

The retail sector in particular might be one to keep an eye on in light of these recent figures as the number of companies falling into administration excluding retailers declined between the first quarter of 2011 and the same period in 2012 by ten per cent.

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