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.