The French government's plans to reform the country's retail sector is likely to lead a jump in the number of store failures this year, according to a report by credit insurer Euler Hermes.
 
The conclusions are based on proposed legislative measures that will be debated in Parliament this spring.

The French government wants to phase out so-called marges arrières, or back margins, which suppliers include in their prices during negotiations with distributors. Those prices are often not reflected in retail prices.

The reforms also propose greater flexibility in regulations covering the opening of new stores and the gradual reduction of payments deadlines.

Euler Hermes said that during the year to November 2007, the number of store failures was around 100, an increase of 36% on 2006. The number could reach between 140 and 150 in 2008, the insurer said.

"The stores affected were those run by independent operators who may only have one or two outlets, franchisees of chains operating relatively small-scale supermarkets of 1,000 sq. m and less and convenience shops," one of the authors of the report told just-food. 

"Within the context of ever-increasing competition, these categories of outlets that failed in 2007 will be more than ever in the firing line in the current year."