More than 1,200 retail businesses entered insolvency in the last year – the highest number in five years.
Figures from law firm RPC showed that the number of insolvencies in the retail sector had increased to 1,252 over the past year, up from 1,232 the year before, and up 31% compared with 2015 – the year before the Brexit vote.
Karen Millen, Bonmarché and LK Bennett are just three high-profile examples of fashion retailers that have gone into administration in the past year.
Tim Moynihan, senior associate at RPC, said that hesitancy from investors was in part to blame for the increase.
“There hasn’t been any let-up of pressure on retailers in the last year,” he said. “Funding is extremely hard to come by – especially for smaller retailers – whether from traditional lenders or other backers such as private equity.
“We are seeing a number of insolvencies where existing backers are no longer willing to put in further debt or equity to tide those businesses through the current weak economy. That’s a problem, as many need to increase their investment to ensure they can take advantage of the continued shift to ecommerce, and survive what may be a temporary reduction in demand.”