More UK resellers go to the wall

Credit reference agency Graydon said that the number of UK channel insolvencies is still at a nine year high.

Many resellers hoped that last year was the end of the culling of the industry when 356 resellers went to the wall. That was the worse year since 2002 when 413 resellers shut down.

But the first quarter of this year show that the same numbers are shutting shop as the same period last year.

Some 89 resellers hit the wall in the first three months of the year, compared with 88 in the previous quarter and 76 in Q1 of 2011.

Of the 89 closures 18 were compulsory liquidations, 25 were receiver appointed and 46 were voluntary liquidations.

Among the high high-profile casualties so far was electronics specialist AJ Electronics, which hit the wall in March after nearly 28 years in business.

Like AJ, a large chunk of the channel insolvencies have been the bricks and mortar high street companies. Also taken down were Sony store operators Sonex and Headsun and Bascam.

These are the sort of casualties which are typical of a recession and hit small to mid-sized resellers. The bigger companies are able to survive because the can give cash strapped customers longer to pay.

Graydon’s figures confirm early ones from Experian showed the rate of insolvencies during February 2012 increased to 0.10 per cent, up from 0.8 per cent in February 2011. The IT industry was second only to pharmaceuticals The Experian figures only record half the number of insolvencies that Grayden does.

Max Firth, UK managing director for Experian’s business information services division, said at the time that reselling was a risky business and many of the smaller businesses were not taking enough care to check the creditworthiness of suppliers and customers before doing business with them.”

But it appears to be more than that.  This sort of advice could apply to any small business trying to operate in a recession.  

It is not clear if all of this is simply an IT reseller problem or one which applies to the whole economy.  

There are reports that some resellers were having to fight against tier one PC manufacturers such as  HP and Acer and were  finding it tough, but the feeling among many resellers appears to be that things will get better when the economy picks up and people want to buy computers again.