As the high street braces itself for the next rent quarter day on Monday, figures from insolvency trade body R3 show that nearly half of all jobs and stores survive the major retail failures.
Monday 25 March is traditionally the day when three months’ commercial rent falls due. The last quarter day in January prompted the collapse of Jessops, HMV and Blockbuster.
While conditions on the high street remain tough, an analysis by R3 of major retail failures during 2011 and 2012 reveals that 44 per cent of jobs were preserved during the insolvency process, while 47 per cent of stores survived.
Jeremy Oddie, North West regional chair of R3 and head of recoveries at accountants Mitchell Charlesworth, said: “Recent research by R3 showed that one in three retailers in the North West is considered at risk of failure in the coming year. However, certainly in the case of larger retail chains, administration is not always cataclysmic as in many cases major parts of the business survive.
“The high street is having to re-define itself, and many chains have been shedding stores to create a more workable business model. This process could reach a natural conclusion at some point in the year ahead, although we expect a few more major insolvencies in the meantime.
“We expect retailers will focus on retaining stores in the most popular high street locations, which have higher rents but also higher footfall, at the expense of poorer quality locations with lower rents and less trade. However getting rid of stores in these less desirable locations is only an option for those which have the cash to pay off their landlords. Otherwise they will have to wait for the lease to expire or, if they are in financial trouble, to restructure their business through a CVA.
“Landlords will have to offer greater flexibility than the olden days where they businesses were locked into onerous, long-term leases. Consumers are forcing retailers to make some stark choices, and in some case it will be modernise or disappear from the high street entirely.”