Around 140 retail chains "could fail in 2013"

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UK High Streets set for nightmare 2013: 140 retail chains 'could fail next year' as consumers look to online bargains

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UPDATED:

09:15 GMT, 24 December 2012

Consumer cutbacks and the increasing popularity of online retailers mean around 140 retailers could soon join Comet in collapsing into administration, according to research by business recovery experts.

A number of national or regional retail chains could fail in 2013, says Begbies Traynor, which warns that those on its critical watch list are unlikely to see the year out.

Its research measures corporate distress levels among businesses across the UK.

Troubled times: Even more retailers are likely to collapse into administration, it has been warned

Troubled times: Even more retailers are likely to collapse into administration, it has been warned

The study found almost 140 firms were in a critical condition in the fourth quarter, while more than 13,700 were in 'significant' distress – up 35 per cent during the three months to December 17.

The highest increases in ‘significant’ distress were suffered by booksellers (up 85 per cent), pharmaceutical chains (up 80 per cent) and off-licences (up 38 per cent).

Julie Palmer, partner at Begbies Traynor, said: 'With quarterly rent day landing on December 25 combined with fierce competition and significant margin pressure throughout the January sales period as consumer tighten their belts after Christmas, we could well see a surge of new insolvency activity during the first quarter of 2013.'

Firms on the critical list include independent outlets, as well as major national and regional retail chains, Begbies added.

Book retailers have been hit by competition from players such as Amazon, while convenience stores have suffered from the rising dominance of supermarkets.

Ravaged retail: Recent high profile casualties include JJB Sports as well as Comet

Ravaged retail: Recent high profile casualties include JJB Sports as well as Comet

Ravaged retail: Recent high profile casualties include JJB Sports as well as Comet

Ravaged retail: Recent high profile casualties include JJB Sports as well as Comet

The practice of so-called 'showrooming' has also hit many bricks and mortar retailers, with consumers visiting high street stores to try a product before finding the best price online.

But the trend for many homeowners to 'improve, not move' has helped home decor and household goods retailers to buck the trend with a rise in corporate health in the fourth quarter.

Begbies said retailers selling furniture, lighting, home decorations, hardware and paints have seen a combined 13 per cent fall in significant distress levels in the last three months.

Recent high profile casualties include JJB Sports as well as Comet.