New fears for future of the UK high street

Insolvencies among independent stores up by 45%

The growing dominance of supermarkets in Britain has been blamed for a surge in the number of independent retailers going bust.

Insolvencies were 45 per cent higher during 2005 than in the pervious year, research from the accountancy firm Grant Thornton shows. The total number of food, drink and tobacco retailers has nearly halved since 1995.

The Grant Thornton study comes against a background of growing concern about the power that retailers exert over suppliers. The Forum of Private Business, an industry group representing around 25,000 small-and medium-sized firms, is understood to be meeting tomorrow with the minister for Industry and the Regions, Margaret Hodge, to complain about disputes between retail giants and suppliers.

The FPB's chief executive, Nick Goulding is expected to highlight retailers' increased demand that suppliers allow them long payment periods.

The big four supermarkets - Tesco, J Sainsbury, Asda and Wm Morrison - are under fire for their dominance of the high street. Critics accuse them of stifling competition, squeezing suppliers and killing off town centres. The Competition Commission is investigating the sector.

Duncan Swift, the head of Grant Thornton's food and agribusiness recovery practice, said the strength of the supermarkets was a "crucial" factor in the number of independents going under.

"It's symptomatic of the ever-increasing dominance exerted over the British high street," he said. "And it's further evidence of the competition issues that are caused by this dominance."

Mr Swift warned that the trend was likely to grow unless action was taken. "The UK needs to decide what retail landscape it wants. At the moment, we're seeing a shift towards the US model, with ever-bigger retail parks and, in effect, no high streets."

The Association of Convenience Stores also called on the Government to act. A spokesman said: "The question is, is the power of supermarkets just a fact of life that's going to happen anyway? Or is it happening because there is a real imbalance in the market towards the large retailers? They have significant buying power. Something can be done about it."

Analysts and investors have defended supermarkets, pointing out that the UK is one of the most competitive retail marketplaces in the world.