British retail sales volumes for April 2012 decreased by 1.1% compared to a year ago, the largest fall in sales volume year-on-year growth since August 2011.
Meanwhile, half of the UK’s Insolvency Practitioners expect the wholesale and retail sector to experience the highest number of insolvencies in 2012 - according to R3, the insolvency trade body’s recent members’ survey.
This is double the proportion (28%) that thought the same in October 2010. The past two years have been turbulent for the retail sector and in the first quarter of 2012, considerably more retailers (50%) said they were experiencing decreased profits and reduced sales volumes compared to a cross-sector average of 36% and 37% respective.
Lee Manning, R3 President, comments:
“We have seen a number of big name brands go bust very publicly. Our recent research shows that more retailers are experiencing the pressures caused by shrinking demand and consumer expenditure, compared to businesses in other sectors. Insolvency Practitioners work at the coalface of business distress and for half to choose one sector over all others brings the retail crisis into sharp focus.
“Are we expecting a further bloodbath on the high street? We can’t say for sure but we can expect a steady stream of insolvencies in this sector over the course of the year.”
Interestingly, only 14% of IPs thought a decrease in consumer spending would have the most negative impact on businesses’ financial stability in 2012, compared to over a fifth (21%) in October 2010.
Lee Manning concludes:
“This is unusual given the dependency of retailers on consumer spend. In fact more IPs thought lack of bank lending or a modest rise in interest rates would have the most negative impact on businesses. This is perhaps a reflection of the fact that across the board, businesses are experiencing serious cash flow problems and, consequently , are looking very carefully at what they spend.”
