As the online sector continues to go from strength to strength in the UK, traditional retail is struggling with 69 retail chains going into administration in the first quarter of 2012.
The number of British retail businesses announcing administration has risen by 15 percent in the first quarter of this year, an occurrence that is blamed squarely on a combination of growing online sales versus a general consumer downturn. In that sense, the climate in the UK is not so different from Australia’s.
Unlike Australia, however, the downturn is having a more profound effect on an already struggling UK jobs market. Accountancy firm Deloitte said that 69 chains have called in administrators in the first quarter of 2012, compared to 60 in 2011.
The most recent collapse was Game Group, which had 610 UK stores, falling into administration on March 26. Others include lingerie firm, La Senza, fashion retailer Peacocks, outdoor specialist Blacks Leisure and gift seller Past Times.
According to Deloitte, the failure of these five chains has accounted for almost 10,000 job losses out of a total of 22,000 employees among them.
Restructuring Services Partner at Deloitte, Lee Manning believes that some traditional retailers are no longer nimble enough to compete in a new, fast-paced retail environment.
“A fast-changing retail environment will require certain businesses to reassess their store portfolios, not as a matter of choice, but in order to survive.”
If the UK economy continues to struggle along, there is no doubt many more retail chains will fold in the years ahead, putting even more pressure on a fiercely competitive job market. England has already been through a period of civil unrest last year and increasing the unemployment rate can only compound the problem.
On the other hand, our own economy bears many similarities to the UK’s. Is the NRA correct and do we stand to lose thousands of retail jobs in the near future, or can we stand up where Great Britain has fallen down?