The closure of high street store chain Debenhams was predicted as far back as June 2018 by a credit risk API.
According to analysts at global credit checking business Creditsafe, the changing conditions around Debenhams’ credit rating were clear indicators of trouble in the PLC, which went into administration last week.
Warnings from the London Stock Exchange were posted to the Creditsafe platform alongside trend data which uses the platform’s automated intelligence algorithm to highlight ‘at risk’ entities. The first warning came on the 19th June 2018 and ten months later, a further warning on the 5th March 2019.
Speaking of the data, Creditsafe’s group data director David Walters said, “Data can be incredibly powerful and when used intelligently, it reveals truths that might otherwise slip under the radar.
“While the demise of Debenhams was likely unavoidable, the impact of that demise could have been lessened had those working with Debenhams been tracking their data at a granular level. Through Creditsafe’s algorithm, that analysis is made easy, empowering businesses to monitor the risk associated with those companies they do business with.”
Creditsafe isn’t the only credit checking company in the world, but it is one of the best known, used by more than 200,000 users accessing data on over 320m businesses worldwide. Its unique algorithm uses factors including rating and limit decrease, CCJs, financial history, accounts filed, profit and loss warnings and payment information to make assessments that feed into credit scores. Creditsafe pulls in data from a range of sources including Companies House, Registry Trust and The Gazette’s alongside its first party data which includes DBT insight.
Debenhams isn’t the first company to be flagged by Creditsafe’s algorithm, which has been analysing businesses since Creditsafe was founded in 1997. Other predicted downfalls included Carillion, the construction firm that went into administration in January 2018, and Office Outlet, previously Staples, which announced its closure in 2015.
Creditsafe’s CEO Cato Syverson said, ““Debenhams is Britain’s biggest department store chain, 240 years old and a household name, but like many in the retail sector and on the high-street it has been showing signs of struggle in the past few years. We have seen the chain fall under the control of lenders and administrators have been appointed to handle the successful sale of the business. Of course this will cause ripples in the retail sector and have repercussions for suppliers.
“During times of economic uncertainty on the high-street we often see a peak in our sales at Creditsafe and people accessing business reports and that’s because many of our products and tools allow our customers to look at businesses of any size across the World and use our business intelligence data to decide what level of trade, they are going to do with them.
“We hold data on over 340m businesses Worldwide. In the past few years we have seen retailers that are well established such as Maplin, House of Fraser, Blockbuster and now Debenhams run into trouble. 2019 could also be a tough year for independent retailers, there are high costs around running retail stores, and continuing weak demand.
“This in turn will have an inevitable knock on effect for those who own commercial retail property. Various factors have made consumers more anxious about spending and the high-street will feel the brunt. Businesses no matter how big or small need to make sure they are doing their due diligence when it comes to deciding who they will trade with.”
As Britain’s high streets continue to struggle and uncertainty around Brexit prevails, businesses across the country will be looking to sources like Creditsafe to understand how they might be impacted and to mitigate risk in the relationships they hold.
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