Retail insolvencies on the rise, report finds

More than 465 bricks-and-mortar stores closed their doors for good in the US over the weekend, sparking headlines that the ‘retail apocalypse’ is alive and well.

And while the store closure surge was primarily driven by retailers, such as Gap, J.C. Penney and Victoria’s Secret, ‘rightsizing’ their footprints after a slow December, rather than businesses going bankrupt, it comes as retail insolvencies in Australia are on the rise.

This is according to the fourth annual Worrells Insolvency Report, which revealed that retail had the fourth highest rate of insolvency rate of any industry during FY17-18.

Retail insolvencies accounted for 8 per cent of total insolvencies in the period, compared to 7 per cent the year prior. Within the sector, the rate of corporate insolvencies jumped 19 per cent year on year.

New South Wales and Victoria had the highest rate of corporate insolvency appointments, at 31 and 27 per cent respectively.

Twenty-seven per cent of these appointments occurred because of “economic conditions affecting [the] industry, including competition & price cutting,” according to the report.

Chris Cook, a partner at Worrells in Brisbane, thinks the trend is unlikely to get better soon.

“The enquiries and discussions we have daily with business owners and their advisors tells me that there’s more stress and pressure to come in the construction and retail industry and trading environments,” said Cook.

“Times have simply changed the game, and there’s many variables to substantiate why.”

Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.

Comments

1 comment

  1. Don Gilbert posted on March 10, 2019

    I believe that failing to: 1. Structure leases properly aka FIXED COSTS; 2. Failing to manage these expenses; oft 2, 4, 8 years out; 3. Linked to Business Performance Metrics; 4. Present one's cases as my new Software Model can; is the Prime Cause of business failure in the Retail Business Sector. Period. Buy my Lease Negotiation Tool Kit and or come to us to for rental evaluation at lease renewal.

Comment Manually

Twitter

The worst case scenario for many retailers came to fruition on Monday afternoon, when Victorian Premier Daniel Andr… https://t.co/zyRB162Yip

5 days ago

Retail in Melbourne to be forced to close from 11:59pm this Wednesday. Contactless click-and-collect and online del… https://t.co/8um79lnp76

5 days ago

Macca's stores around the world are getting a makeover. We go behind the scenes with the design agency that created… https://t.co/1lEOwd3dPE

6 days ago