13% more bankruptcies in retail sector in Q1-Q3 2011

2011-10-07



Courts declared the bankruptcy of 127 companies operating in the retail sector in the first three quarters of 2011, 13% more than during the same period of 2010, according to Coface, a trade receivables management company. Bankruptcies of retailers increased by 65% to 33 while those of wholesalers were comparable to the previous year at 81. A total of 521 companies in all sectors went bankrupt in Poland, up 4% from the end of September 2010.
Companies in the retail sector accounted for 24% of all bankruptcies in Q1-Q3 2011, with only the production segment having a higher share at 31%. However, in the latter sector bankruptcies fell by 19% year on year to 156. Notably, 12 companies in the clothing and textile production category went bankrupt, a year-on-year decrease of 50%. There were also 25 bankruptcies of companies producing foodstuffs and beverages, showing no year-on-year change.
The increasing tendency of bankruptcies in the retail sector is related to the intensification of consolidation on that market, with smaller companies being pushed out by large chains. A noticeable trend in the sector is retailers attempting to keep up with their due payments only to wholesalers that continue to cooperate with them, according to Coface. If a supplier decides that a retailer is not reliable enough and stops cooperation, the company has to be prepared for a long process of recovering due payments. Also, cash only transactions are becoming more common, causing further problems for companies struggling financially.