Leading credit risk insurer Atradius launches the latest report in its 'sector performance' series, this time on the UK retail sector. This series of reports is designed to provide UK companies doing business with a particular sector, information on the risks and opportunities in that sector as well as a general outlook for its future health. Commenting, Simon Groves, UK and Ireland Brand Manager at Atradius, said: 'Our report examines the recent casualties on the British high street and looks at the trends that have created the success or failure of some of our most established names'.

'It also gets behind the company-focused marketing hype and looks at how customers' buying behaviour will shape the evolution of shopping across the major retail segments'.

There are major competitive pressures across all sub-sectors.

Higher rents and wage costs are not being offset by similar increases in consumer spending, as the higher interest rates and personal debt pressures start to bite.

Key points for businesses to be aware of include:.

* The main problems over the next 12 months are likely to be in the DVD/CD market: the recent failure of Music Zone has resounded round this once-buoyant market, and for such big ticket items as white and brown electrical goods and furniture as deep discounting increasingly commoditises these products.

* There is a debt maturity time bomb waiting to explode for some.

Underlying the seemingly healthy performance by some of the venture capital owned retailers is a high level of debt, with the consequent interest obligations * Unsurprisingly, the internet is the main growth story.

The online spend by consumers in the 10-week run-up to Christmas was GBP7.66 billion and in just one day Amazon received more than 750,000 orders.

Total internet sales in 2006 were GBP30.2 billion - about 12% of total retail sales.

* In a number of sectors, the major trend is towards polarisation: for example in women's fashion, the budget stores like Primark and Peacocks are faring well, as are high-end designer names such as Burberry, Prada, Hugo Boss, which are becoming ever more popular with a younger consumers.

* Much growth seems to be coming from expansion - of product ranges and floor space - or from out-of-town outlet parks.

Homebase, for instance, is installing mezzanine floors in its larger outlets, creating new space at relatively low capital cost.

* The world domination of the supermarkets continues apace as they continue to expand into non-food product lines, with 77,000 non-food products launched by the big supermarket chains in 2006.

Author of the report, Atradius Senior Underwriter, Simon Rockett, concludes: 'This report is just one output from our constant monitoring of trends and trading patterns across all business sectors across the globe'.

'We can see clearly from this report's findings that customer demand is shaping the sector's future'.

'The challenge for retailers is to ensure that they evolve in a way that responds to buying patterns'.

'Businesses trading with the retail sector need to understand these buying trends and view their partners accordingly'.