Retailer insolvencies jump to higher level than pandemic as brands buckle under economic pressure
A squeeze on shoppers’ finances has increased the number of retailers being plunged into hot water, new research shows, as the cost of living crisis continues to decimate businesses.
As inflation sits at a sticky 8.7 per cent, the number of retailers entering insolvency jumped 56 per cent in the past year, according to figures from international law firm RPC.
It’s the highest level in nearly a decade, with some 1,942 retailers going bust in 2022/23, up from 1,243 in 2021/22 – surpassing pandemic levels when shoppers were prohibited from hitting the high street.
Bigger players in the retail market have capitalised off this trend, snapping up businesses which have buckled under the economic pressure.
“Challenging economic conditions over the past year have had the impact of forcing struggling retailers into insolvency,” Finella Fogarty, partner and head of RPC’s Restructuring and insolvency practice.
“Despite the challenges faced by the sector, the insolvency of financially weaker retail businesses is creating opportunities for stronger players. These businesses may be able to increase their market share through strategic acquisitions of smaller competitors.”
‘Big Four’ supermarket Tesco acquired the brand and intellectual property of Paperchase earlier this year, after the embattled stationary company collapsed into administration in January.
Paperchase products will now be sold in Tesco stores but its 106 physical store will remain vacant.
In December last year, Next also rescued struggling fashion chain Joules in a £41m deal which saved 100 shops and 1,450 jobs.
Over the past few years, the British retailer has become known for saving troubled brands and later selling their products on its online website.
It also acquired online furniture store Made.com last November for a mere £3.4m after it struggled post-pandemic – a staggering discount from the firm’s £775m IPO price in 2021.