Reseller insolvencies hit nine-year high in 2011

Last year saw the largest number of reseller insolvencies for nine years, figures from credit reference agency Graydon reveal.

Some 88 UK resellers hit the wall in the final quarter of 2011 as the bleak economic backdrop took a heavy toll on the channel.

This was slightly down from the 99 and 93 insolvencies recorded in Q2 and Q3 2011 but up sharply on the same quarter of 2010, when 68 resellers hung up their boots.

Insolvencies for the full year stood at 356 – the highest since 2002's total of 413 and more than double that of the boom years of 2006 and 2007.

Alan Norton, head of intelligence at Graydon UK, said 2011 was also characterised by a relatively high number of insolvencies among established resellers.

He cited Network SI, Pars Technology, Zentek Solutions, SHD Technology and Tempus Computers as prime examples.

"They were all established at least 10 years ago," Norton said.

"It is tough out there and those not embracing new technologies such as the cloud, or those who relied on retail or consumer, suffered."

GDP data this week showed the UK economy contracted in Q4 2011 and Norton said he expected a further contraction this quarter before a return to growth in the second half.

This would be reflected in the reseller body count, added Norton, with insolvencies likely to rise further on an annual comparison before dropping back later in the year.

"There is one light at the end of the tunnel," he said.

"You do not have the same level of new market entrants as in other sectors and those left are very experienced and have cut their cost base accordingly."