LONDON: Retailers in the UK could endure a year of "carnage" as a variety of challenges combine to negatively impact the sector.
RCapital, the consultancy, has predicted the number of retail insolvencies in 2012 is likely to surpass the total of 349 registered in 2008, itself the highest figure on record since 2002.
"The new year will trigger a round of retail insolvencies which will outstrip 2008," Jamie Constable, RCapital's CEO, told the Financial Times.
"With VAT payments pending, rents going up and margin erosion, you've got increasing costs everywhere and competition against online businesses.
"You're going to see a lot more boarded up shops on the high streets as people go to out-of-town shopping centres, Bond Street or online.
"Big bricks-and mortar retailers, those with 50 to 500 shops, are the ones which will really take the pain."
CB Richard Ellis, another specialist consultancy, believes that between 30,000 and 40,000 retail jobs may be lost over the coming 18 months as a consequence of the same trends.
"It might not be an official recession, but we are in a retail recession," Jonathan De Mello, director of retail consultancy at CB Richard Ellis, said. "Retailers are experiencing falling sales and profits."
In a seeming confirmation of this process, D2 Jeans, the apparel chain, recently closed 19 outlets, making 200 staff redundant, and is seeking a buyer for a further 28 branches.
La Senza, the lingerie retailer possessing 146 stores around the UK, also revealed it would enter administration in the run-up to Christmas.
Barretts and Priceless, the shoe chains, Hawkin's Bazaar, the toy group, Past Times, selling a broad range of gifts and novelties, and Blacks Leisure, the owner of Blacks and Millets, are facing similar problems.
"When debt was cheap and the retail environment was buoyant, weaker operators were shielded, but with little or no growth in many retail sectors, any progress is achieved only at a rival's expense," Maureen Hinton, an analyst at Verdict, the research firm, said.
RCapital, the consultancy, has predicted the number of retail insolvencies in 2012 is likely to surpass the total of 349 registered in 2008, itself the highest figure on record since 2002.
"The new year will trigger a round of retail insolvencies which will outstrip 2008," Jamie Constable, RCapital's CEO, told the Financial Times.
"With VAT payments pending, rents going up and margin erosion, you've got increasing costs everywhere and competition against online businesses.
"You're going to see a lot more boarded up shops on the high streets as people go to out-of-town shopping centres, Bond Street or online.
"Big bricks-and mortar retailers, those with 50 to 500 shops, are the ones which will really take the pain."
CB Richard Ellis, another specialist consultancy, believes that between 30,000 and 40,000 retail jobs may be lost over the coming 18 months as a consequence of the same trends.
"It might not be an official recession, but we are in a retail recession," Jonathan De Mello, director of retail consultancy at CB Richard Ellis, said. "Retailers are experiencing falling sales and profits."
In a seeming confirmation of this process, D2 Jeans, the apparel chain, recently closed 19 outlets, making 200 staff redundant, and is seeking a buyer for a further 28 branches.
La Senza, the lingerie retailer possessing 146 stores around the UK, also revealed it would enter administration in the run-up to Christmas.
Barretts and Priceless, the shoe chains, Hawkin's Bazaar, the toy group, Past Times, selling a broad range of gifts and novelties, and Blacks Leisure, the owner of Blacks and Millets, are facing similar problems.
"When debt was cheap and the retail environment was buoyant, weaker operators were shielded, but with little or no growth in many retail sectors, any progress is achieved only at a rival's expense," Maureen Hinton, an analyst at Verdict, the research firm, said.
Data sourced from Yahoo News, Financial Times, Guardian; additional content by Warc staff
