New research has shown that fewer retailers went into administration in the first three months of 2017 compared to the same quarterly period last year.
According to KPMG, 28 retailers across England and Wales went into between January and March this year, compared to the 30 recorded in 2016 before the Brexit referendum and before the increase in the National Living Wage.
While the number of retail insolvencies fell, the number of companies across all sectors going into administration increased year-on-year.
However, many analysts have predicted a perfect storm for retailers as they struggle to manage the extra pressure – especially the changes in business rates, rising costs as a result of inflation and the tendency for quarterly rent days to coincide with spates of administration announcements.
Household brands like Jaeger, Agent Provocateur and Jones Bookmaker all collapsed into administration during the first quarter this year, and KPMG warned they could be more headline troubles in the coming months.
“The high-profile administrations of numerous retailers seen during the first quarter of the year are good examples of how those consumer-facing businesses which are having to contend with fragile consumer confidence and rising raw material costs are coming under a degree of stress,” KPMG head of restructuring Blair Nimmo Nimmo said.
“There is currently a cocktail of factors causing headaches for consumer-facing businesses. Rising prices and lacklustre wage growth, coupled with high levels of household debt, is dampening consumer desire to spend.
“Simultaneously, the impact of higher import costs, the new national living wage and business rate rises are only serving to compound the squeeze.
“I wouldn’t be surprised to see few more casualties on the high street over the months ahead.”
KPMG’s research comes after recent data from PwC and the Local Data Company that indicated the increasing number of fashion shops and bank branches closing down and making way for health clubs, vaping shops, takeaways and jewellers.
In 2016, 4534 stores opened in the UK while 5430 closed, a net change of minus 896.
This figure represents the closure of more shops last year than in 2015, when the high street recorded a net change of minus 498.