7th APRIL 2015 - Vol.XXXVIII No.018
Business News

Bleak winter for British retailers

LONDON: Four big British high-street retailers had to call in administrators this winter as cash-strapped, web-literate consumers proved unforgiving of stores failing to adapt to fast-evolving markets.

DVD rental chain Blockbuster became the latest casualty on Wednesday, with its British arm entering administration - in which a troubled firm brings in independent financial help in a bid to stay operational - a day after music chain HMV made the same move.

Camera chain Jessops went into administration on January 9 and closed its 187 shops shortly after, while electrical firm Comet shut its 235 stores in December. The failures have cost Britain 9,025 jobs, with another 7,780 in the balance.

Britain's still-struggling economy, which climbed out of double-dip recession in the third quarter of 2012, faces at best sluggish growth this year.

Retailers, meanwhile face stiff competition from supermarkets and online sales, especially in entertainment, where downloads and streaming are eroding markets for physical products.

HMV, Britain's last nationwide music store chain, failed to produce a strong online offering early enough to combat Amazon and Apple's iTunes, Roberts said.

Blockbuster was late to grasp the threat posed by online services such as Netflix and Lovefilm, which offer films and television programmes for download and streaming, while Jessops fell prey to digital photo processing and phone cameras.

Matt Piner, research director at consultants Conlumino, said store chains needed to focus on multi-channel, "bricks and clicks" retailing along with distinctive product ranges.

He cited department stores John Lewis and electricals firm Dixons - which owns Currys and PC World - among companies proving more resilient. Both offer popular "click-and-collect" services.

Another group of retailers have been dragged down by debt, even where sales are holding up. JJB Sports, once Britain's biggest sports retailer, failed in October with administrators only securing a sale of 20 of its over 150 stores.

HMV was also debt-laden, with underlying net debt growing to £176.1 million in the six months to the end of October, and banks and suppliers finally running out of patience on bad loans.

Debt concerns are stalking private equity-owned fashion chain New Look, which said in November it was planning a £1.1bn refinancing over 18 months.

High street shop vacancy rates had already hit a 15-year high in November, with 11.3 per cent of shops in town centres empty.

"I think consumers are going to remain under pressure this year - inflation is likely to remain above increases in wages for the next year or so, so consumer spending power will be reduced, with pressure to pay down debts rather than spend on the high street," Capital Economics UK economist Samuel Tombs said.

click on image to view the digital edition