The table below which depicts the number of failing retail business makes for shocking read. The situation on the high street is not just bad but downright dire.
When chains collapse into administration, a good many of them emerge from the controversial “pre pack” administration arrangement in essentially the same format but importantly shorne of their outstanding tax liabilities, unprofitable leases and legacy debts.
It was assumed that without the burden of debts, onerous rents, old units and excess stock that the chains could rebuild. This does not appear to have happened.
Looking down the administration retail page is like looking at a Verdun war memorial. The casualties go on and on. Those that were fundamentally flawed in their offerings like Blacks, Woolworths, Zavvi etc have long gone but firms that would be expected to survive have not.
Here’s the table of casualties
This is medium to large chains only. Those of 10 store units or less (of which there are hundreds) and the sole proprietors – of which there have been thousands that have collapsed are excluded. In the chains alone its 150,000 jobs lost.
The 2012, 6 month, casualties are of Somme proportions already.
Even JoePound – a local 99p store – says they are down 50% on 2008 figures and looking shaky. That’s a 99p store!
Some of these chains have been bought by others. Some are pre pack and coming back. But even that is fraught. Madhouse went into and out of pre-pack administration 3 or 4 times in the last 8 years. It was owned by its original owners, investment companies, rival companies and then finally back to its original owner. It had 60 shops many on zero rent deals with no notice to quit (if the landlord find a buyer the tenant must vacate within 48 hours). Even with low debt, paying next to no rents, selling cheaply priced clothing it couldn’t make a profit. They were up for sale in the mid 90’s, valued at £32,000,000. Today the value is nothing. Its closed and the company gone.
Back in 2007/8 many said the retail recession was survivable as long as it didn’t run on & on. The hope was that QE and interest rates of 0.5% would stop the depression. It did, but what we ended up with was a prolonged recession stretching into 4 years for the High Street now. That appears to have been the case. And it looks like lasting until 2015.
The calls for business stimulus grow ever louder.