Recent data from FRP Advisory has suggested that turnaround professionals looking at the retail sector might be in for quite a fight.
The latest retail administration survival index for 2013 found that the retail store survival rate has dropped to 35 per cent. This figure is down from 50 per cent recorded in 2012 and 67 per cent as seen at the end of 2011.
Essentially, the figure means that of all the high street stores entering administration, the insolvency industry managed to rescue 35 per cent, while the others were closed with substantial numbers of jobs lost.
Glyn Mummery, partner with FRP, commented on the figures: “The UK high street has reached a tipping point. The sharp rise in mortality rates for major high street retailers that entered administration last year suggests that the economy will no longer support anyone with a broken model.”
Mummery added that cases like that of Barratts – which has struggled through three administrations in four years – demonstrates that “there are only so many times a broken model can be patched up without a nuts and bolts rebuild”.
The results suggest that the more successful turnaround deals either involve a fundamentally sound business model that has gone temporarily array, perhaps due to access to finance, or require a complete change in approach to a company's way of working.
Retail has become a particularly tricky sector to deal in given the enormous rise in online shopping. However, companies are still making a success in this area, the difference being that they're no longer trying to conform to the conventional retail model and are instead looking to develop their online offerings and customer service approach. 
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