The collapse of Empire Direct could be a harbinger for the wider e-tail and retail channel, market onlookers have warned.

The electrical goods retailer entered administration on 19 January, mirroring the recent collapse of US electricals giant Circuit City.

Administrator KPMG said business at the firm had suffered when credit insurers withdrew cover in October. Low stock levels and operating losses forced it to stop trading.

Its 14 stores have been closed and 150 of its staff made redundant.

Nitin Joshi, founder of ChannelMoney, said: “Empire Direct was on the radar to go under, so companies may have started pulling trading with them. There is a massive amount of pressure in the e-tail and retail space at the moment so it will not be the last to fall.”

Jon Love, business development manager at etailer Clove Technology, agreed that it would be a tough year for the sector.

“Empire was a big brand that a lot of people knew and trusted, so I am surprised,” he said.

“But there is already evidence that some of our other competitors are struggling. It is the really large ones that are being hit the hardest as they have larger overheads.”