Retail insolvencies expected to increase as market consolidates

With six retailers have already gone bust in 2024 and two others warning that they may struggle to stay afloat KPMG is warning that more retailers could collapse, with high inflation and a squeeze on personal finances hitting consumer spending.

According to figures from Centre of Retail Research (CEBR), over 400 job roles have been impacted by retailers shutting up shop in light of the cost of living crisis and financial strain placed on businesses. The most notable collapse has been Lloyds Pharmacy, which is set to leave behind over 1,000 empty stores, it was reported that liquidators were appointed to the pharmacy chain with creditors set to lose out on approximately £255m Last March, its private equity owner Aurelius Group launched a strategic review of its entire UK store base following financial and operating troubles.

High street retailer Superdry also said that it was mulling a CVA after reporting widening losses. Superdry, which has 98 stores in the UK, also later said it was in talks with parties over a possible takeover deal which would see the brand saved.

Ted Baker owner Authentic Brands is also considering a CVA or mulling a major cost cutting plan which could see stores shut and jobs lost at the brand.

Rob Baxter, UK Head of Corporate Finance and Global Head of KPMG’s consumer and retail M&A team (speaking to City AM), said “I would say that the retail sector has been restructuring itself for maybe 20 years,” Baxter said, noting the more than a decade-long push from physical retailers to ramp up their online presence.

“There will continue to be an uptick in insolvencies as the year progresses.It looks like what we’re seeing is more consolidation within certain sectors and more clear distinction between the winners and losers in the sector.”

“I don’t think it’s going to be a year of massive spending sprees. But it feels more positive than last year.”