Who'd be a Shopkeeper? CVA

Who’d Be a Shopkeeper? – a rise in retail CVAs

Latest statistics from the Insolvency Service suggest that now is not a good time to be “a nation of shopkeepers”. This supposedly derogatory remark is usually attributed to Napoleon. But in fact was used earlier by the famous economist Adam Smith in The Wealth of Nations.

Corporate insolvencies (includes all processes) in Q1 of 2011 show an increase of some 55% compared to the same period last year for companies in the wholesale and retail sectors. Traditionally, businesses already struggling in the retail sector often see the Christmas and sales season as last chance survival. The quiet period which follows is when many businesses fail. But poor weather hit sales in the run up to Christmas 2010.

Perhaps the biggest issue is confidence by the public. The combination of high unemployment and concern over job security, the VAT increase in January and anxiety over the impact of government cutbacks has seen the man-in-the street tighten his belt.

The latest statistics have shown a substantial rise in the number of retail administrations and retail company voluntary arrangements (CVAs) for the first quarter of 2011, compared with the last quarter of 2010. Administrations in retail have seen a 55% jump from 80 in the Q4 2010 to 124 in Q1 2011. While CVAs in retail have risen by 30% from 23 in Q4 2010 to 30 in Q1 2011. The overall number of administrations was up by nearly a quarter from 642 in Q4 2010 to 782 for Q1 22%.

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