Comet store
High Street is projected to see more retail failures.

Following the demise of electrical retailer Comet, nearly 140 retailers are in severe financial distress and are likely to collapse regardless of their performance during the Christmas trading season.

Business recovery firm Begbies Traynor, in its UK business solvency survey, has said that about 140 retailers are in a "critical condition", while the number of firms in financial distress increased 35 percent to 13,700 during the fourth quarter of 2012.

Based on the results of its latest study, Begbies Traynor predicts an increase in retail insolvencies in 2013 in both national and regional chains, as well as at single retail locations. Furthermore, many retailers will find it difficult to pay their quarterly rent due on Christmas Day.

"With quarterly rent day landing on December 25 combined with fierce competition and significant margin pressure throughout the January sales period as consumer tighten their belts after Christmas, we could well see a surge of new insolvency activity during the first quarter of 2013," said Julie Palmer, partner at Begbies Traynor.

Retail firms in the books, news and stationery sectors showed 85 percent more distress signals than the previous quarter. On the other hand, online retailers, supermarkets and shops selling decor and household goods have seen their business improve.

"Though the performance of national retailers is well documented, it represents just the tip of the iceberg with thousands of smaller and specialist retailers struggling to stay afloat in today's austerity Britain," Palmer added.

She notes that the UK consumers are preferring supermarkets and large department stores, rather than convenient stores, to get everything in one place. The trend has affected the financial stability of independent chemists and alcohol retailers in particular, as they are unable to cope with the supermarkets' prices, low-margin promotions and the convenience factor.

Britain's high street has seen a number of high-profile casualties in 2012 as retailers, including Comet and JJB Sports, closed their operations making thousands of jobs redundant. Spending cut by consumers in line with the austerity measures in the county, increasing competition from online retailers and the rising dominance of supermarkets are among the reasons that led to the collapse of the firms.