Retail insolvencies surged in 2020 as the Coronavirus crisis caused high street shops deemed ‘non-essential’ to close their doors – many of which are now unlikely to reopen.
The Centre for Retail Research, which compiles data charting retail administrations, company voluntary arrangements (CVAs) and stores closed due to rationalisation, reports “the worst year since 2008-09”.
It adds: “The massive peak in online sales whilst physical shops have been shuttered presents greater problems for British high streets because many shoppers will not return. The retail crisis in jobs, businesses, stores and high streets has been coming for a long time.”
A surge in retail administration
The Centre’s latest figures show a surge in retail administration in 2020, leading to both store closures and substantial job losses at medium to large chains (five or more locations).
In 2020, larger retailers closed 5,251 stores, with 2,141 of these due to going into administration. At these large chain stores, 104,321 people lost their jobs, 50,810 of those because of administration.
This compares with:
In 2019:
- 5,901 stores closed, 684 due to administration.
- 72,266 jobs lost, 9,060 due to administration.
In 2018:
- 3,303 stores closed, 1,631 due to administration.
- 38,433 jobs lost, 22,671 due to administration.
The figures indicate that among chain stores with five or more locations, almost as many shops closed due to administration in 2020 as in 2018-19 combined.
Moreover, the number of jobs lost at those locations in 2020 alone was 60% higher than in the previous two years added together.
What about retail insolvencies in 2021?
Figures are only just starting to emerge for January 2021, but the Centre for Retail Research is not optimistic about the sector’s prospects.
In its report ‘The Crisis in Retailing: Closures and Job Losses’ it states: “The first half of 2021 looks much like 2020, only worse. We expect there to be 200,000 job losses in the sector and a lot more bad news about corporate failures.”
If your retail business is facing significant hardship due to the COVID-19 restrictions, or for any other reason – and especially if you are finding it difficult to pay creditors – please contact us as soon as possible.
With prompt action, it can be possible to avoid administration using methods like CVAs, which can erase some of your debts with the agreement of your creditors, and leave you with more manageable monthly repayments on the remainder.
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