January 1, 2009 / 12:23 AM / 10 years ago

1,600+ retailers expected to go bust in 2009

LONDON (Reuters) - The downturn in consumer spending will drive over 1,600 retailers out of business in 2009, triggering thousands of job losses and leaving more than one in ten shops empty, a report said Thursday.

Store-closing signs are seen in the window of the Woolworths store in Altrincham, in this recent photo from December 27, 2008. REUTERS/Phil Noble

Market researchers Experian said trading conditions for survivors would be the worst for at least 30 years and there would be knock-on effects at suppliers, manufacturers and service providers.

“There is no doubt that the impact on retail will resonate through the entire economy,” said Jonathan de Mello, Director of Retail Consultancy at Experian.

Retailers are slashing prices as indebted shoppers curb spending amid rising unemployment, sliding house prices and fears of a deep recession.

Experian said big discounts had lured some consumers back into stores, with shopper numbers leaping 12.8 percent in the last week of December. But that was not enough to prevent a 3.1 percent drop in footfall for the month as a whole.

“The last minute surge in shoppers came as a relief to retailers but for most it was not nearly enough,” de Mello said.

“The boost in numbers was driven by massive unprecedented discounting all at the expense of retailer margins.”

Some retailers have not survived, with sweets-to-DVDs chain Woolworths and furniture group MFI falling into administration, a form of creditor protection, in the run-up to Christmas and several smaller companies following suit in recent days.

Experian said 1,137 non-food retailers went out of business in the year ended December, up 21.2 percent on the year, and forecast 440 more would become insolvent over the next four months and the total for 2009 as a whole would be about 1,400.

Some 194 food retailers failed in 2008, up 10.9 percent, and Experian predicted that number would rise to about 230 in 2009.

“The collapses we’ve seen so far are just the tip of the iceberg,” de Mello said.

“At the moment there is too much space in the market and not enough demand. Many retailers are either making no margin or losing money. We anticipate that January will be the toughest for 30 years.”

Experian said the vacancy level on shopping streets was around 7 percent, but with a flurry of businesses recently going into administration that would rise to about 10 percent — “a figure which is likely to increase as more retailers go into administration in January.”

“This large scale retail business failure is expected to have a significant impact on high street returns, affecting everything from investors’ yields on rents to revenues to local authorities,” it said.

“This is not to forget the devastating impact on people’s jobs and livelihoods,” de Mello. “Britain is still a nation of shop keepers and the retail sector is one of the UK’s largest employers.”

Reporting by Mark Potter; Editing by Mike Nesbit

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