Analysis from restructuring specialists FRP Advisory reveals a marked decline in the store survival rates for major high street retailers going into administration last year, with the situation becoming substantially worse towards the end of 2013.
The firm's 2013 administration survival index shows that 1,300 stores closed out of 2,000 affected in 20 major retail administrations, pushing the store survival rate below 35%, down from 50% in 2012 and 67% in 2011.
In the final quarter of 2013 there was only 3% of store survival and 3% of staff survival from the three major administrations of Barratts, Blockbuster and Osbornes Stationers, which FRP Advisory says is a record low.
The overall staff survival rate for 2013 was 48%, marginally up from 46% end of 2012, but down from 66% end of 2011. FRP Advisory says this rate was bolstered by three large administrations: HMV, Dreams and Internacionale.
If these three administrations are excluded from the figures, then the average store survival rate from the other 17 major high street retailers falling into administration during 2013 drops to 26%, and the staff survival rate is down to 36%.
Glyn Mummery, partner at FRP Advisory, said: 'The sharp rise in mortality rates for major high street retailers that entered administration last year suggests that the economy will no longer support anyone with a broken model. For many of the retailers which entered administration last year there were fundamental questions to address concerning their offering and the market they were chasing, rather than just questions of financial structures.'
Mummery pointed to the example of shoe shop chain Barratts, which has almost totally disappeared from the high street, despite once boasting nearly 400 stores, following its third administration in four years. He said this 'shows that there are only so many times a broken model can be patched up without a nuts and bolts rebuild'.
Some household names, like Blockbuster, disappeared because certain products, notably DVDs and CDs, became obsolete once downloading took hold as a trend, and Mummery warned that all high street retailers needed to look at how they tackled the impact of online retailing.
'Without top line growth no retailer can bank on long term survival, especially when the current benign interest rate environment which has propped up so many zombie firms for so long, is finally showing signs of coming to an end,' Mummery said.
