1,600 retailers ‘to go bust this year’

The report from market researcher firm Experian forecast that 2009 will be a gloomy one for retalers, with store closures sparking thousands of job losses and leaving more than one in ten shops empty.

The report added that trading conditions for those retailers that survive 2009 would be the worst for at least 30 years. Experian said this would result in knock-on effects at suppliers, manufacturers and service providers.

Jonathan de Mello, Director of Retail Consultancy at Experian, said: "There is no doubt that the impact on retail will resonate through the entire economy."

Experian said big discounts had lured some consumers back into stores, with shopper numbers leaping 12.8 percent in the last week of December. However, there remained a 3.1 percent drop in footfall for the month as a whole.

"The last minute surge in shoppers came as a relief to retailers but for most it was not nearly enough," de Mello said.

"The boost in numbers was driven by massive unprecedented discounting all at the expense of retailer margins."

Experian said 1,137 non-food retailers went out of business in the year ended December, up 21.2 percent on the year, and forecast 440 more would become insolvent over the next four months and the total for 2009 as a whole would be about 1,400.

Some 194 food retailers failed in 2008, up 10.9 percent, and Experian predicted that number would rise to about 230 in 2009.

"The collapses we've seen so far are just the tip of the iceberg," de Mello added. “At the moment there is too much space in the market and not enough demand. Many retailers are either making no margin or losing money. We anticipate that January will be the toughest for 30 years."

Experian said the vacancy level on Britain's shopping streets was around 7 percent, but with a flurry of businesses recently going into administration that would rise to about 10 percent.

"This large scale retail business failure is expected to have a significant impact on high street returns, affecting everything from investors' yields on rents to revenues to local authorities," it said.

Despite the gloom on UK high streets, online retail has continued to grow. Online entertainment retailer, Play.com has reported a 24% growth in sales year on year for the Christmas period.

Simon Perree, CEO at Play.com commented:  “Despite concerns this year about the credit crunch and holding back on gift spending, Play.com has had a hugely successful Christmas with strong sales across all product categories.”

At its peak trading time (Monday December 8^th 08), Play.com processed 1000 orders per minute up from 700 orders per minute at the same stage in 2007.