Over 5,000 retailers will go out of business next year, when the worst effects of the recession will kick in.
That is the prediction from accountant and business advisor BDO Stoy Hayward LLP, in its latest Industry Watch report. The firm says it expects 4,630 failures this year, rising to 5,070 in 2010.
“Unemployment has risen less than the economic contraction originally suggested,” says Tony Nygate, retail business restructuring partner at BDO Stoy Hayward, “with a flexible labour market allowing employers to reduce hours and wages rather than make redundancies.
“These factors have helped maintain retail spending surprisingly well in the face of recession and have been instrumental in preventing even more retailers going into liquidation.”
However, he warns, retailers can expect the worst of the recession to hit next year, when rising unemployment and hard-to-get consumer credit will dampen prospects.
“That means retailers will face a particularly tough 2010,” he says.