AN INCREASE in the number of high street retailers going bankrupt or entering receivership is “inevitable”, according to new research.

Verdict Research, the specialist retail analyst, expects like-for-like sales growth on the high street to be just 0.1 per cent a year over the next five years. Yet costs will rise by 3 to 4 per cent, largely because of higher rents and increases in the minimum wage.

Town centre shops are under pressure from lower-cost rivals operating from suburban retail parks and internet retailers. Last year town centre shops took £767 million less through their tills than in 2004, a 0.6 per cent fall and the first such drop in modern times.

According to Verdict, 12 big high street retailers have gone into administration, shut down or been sold in the last year.

The value fashion retailer QS/Bewise was forced to close its 343 stores in June after failing to find a buyer for the business. The Co-op is in the process of selling its 36 department stores, and Morgan and Kookai have entered into administration.

In its UK Town Centre Retailing report, published today, Verdict gives warning that a “further shakeout” on the high street is “inevitable”.

Retailers are not the only companies to be hit by this squeeze on the high street. An estimated 30 million sq ft of new shopping space will have become available in city centres between 2005 and 2010. Verdict says that developers may delay or cancel projects if they cannot find retailers to rent the space. The amount of new space will increase by 6.1 per cent during this five-year period, compared with a 0.9 per cent fall in the 2000-to-2005 period.

New projects such as White City in London, Liverpool One and the Broadmarsh Centre in Nottingham will create opportunities for fast-growing retailers such as Primark, H&M and TK Maxx, but this might not be enough to keep projects alive.

Nick Gladding, senior retail analyst, said: “The fragility of demand and retailers’ finances casts doubt on whether all proposed retail developments will be completed on schedule, or at all. Property developers are well aware of the risk of committing to a development without pre-letting much of the scheme, so, unless demand proves sufficient, the development pipeline seems likely to be scaled back.”

SHUTTERS FALL

Silverscreen, DVD retailer, adminstration in June. 65 stores

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