James Nickless-Allen, Head of Sales, Industrial & Commercial and UK
Over the past year, only a handful of months have gone by where a major retailer hasn’t announced a profit warning, a considerable drop in revenue or a final attempt at talks to stave off bankruptcy.
Thomas Cook, House of Fraser, Debenhams, New Look and now Mothercare are among the household names failing to cope with a changing economic climate and heightened competition – particularly from online. 97% of consumers now start their searches online, so it is perhaps no wonder that we are seeing even once leading high street names struggling.
But the story is bigger than that. In October, The Insolvency Service released figures stating that UK retail insolvencies have hit a five-year high. Their data shows that there were 1252 insolvencies in the retail industry in the past year, compared to 1232 the year before. Furthermore, the number of retail insolvencies has risen by a shocking 31 per cent since the Brexit referendum.
We have seen this reflected in the number of auctions listed on ATG’s insolvency marketplace, BidSpotter.co.uk, where there has been an incremental rise in the number of auctions held in the insolvency sector. 253 insolvency auctions took place on the site in the first six months of this year, equating to a 33 per cent year on year increase. This was accompanied by a dramatic 67 per cent increase in lots sold online across the marketplace.
*Data taken from a sample of 15 insolvency specialists listing on BidSpotter.co.uk between January and June 2019
Terry Madden, Director at Wyles Hardy & Co, has also noticed a sharp upturn in valuation instructions in 2019. Mr Madden commented, “The first half of 2019 saw an increase in activity in the distressed marketplace with Wyles Hardy experiencing a greater number of valuation instructions, which in turn has led to a number of disposals by both timed online auction and private treaty sales.”
Another major part of the high street that has been struggling is casual dining. According to accountancy firm UHY Hacker Young, the number of restaurants falling insolvent between June 2018 and June 2019 increased year on year by 25 per cent, to over 1,400 in total.
Report by: UHY Hacker Young
Perhaps the highest profile casualty in recent months was Jamie Oliver’s Italian restaurant chain. Oliver appointed KPMG as administrators to handle the insolvency process, which left 22 restaurants closed.
Again, these figures reflect what we are seeing further down the line. BidSpotter reported an 18 per cent increase in lots available within the Food & Beverage Equipment category in July 2019, compared with July 2018.
“Good restaurants and bad have all struggled from over-capacity, weak consumer spending and surging costs.” said Peter Kubik, partner at UHY Hacker Young. “Having a loyal following is great but if that loyal following stops going out then you have a problem”.
For more information about insolvency auctions, visit BidSpotter.co.uk.