Chain Reaction As Two More Shopping Brands Collapse

The collapses of Toys R Us and electronic gadget store Maplin are not the last as online shopping ruthlessly destroys bricks and mortar stores.

Toys R Us, part of the US out-of-town retail giant of the same name, has crashed with the potential loss of 3,000 jobs and the closure of 106 stores across the UK.

Maplin has also entered administration, leaving 2,500 jobs and 200 stores at risk.

But their failure – and that of Multiyork, Austin Reed and British Home Stores in recent months – is a symptom of a deeper malaise.

The high street and out-of-town retail parks are fighting a war to survive with internet big guns like Amazon and they are losing.

Buildings like barns

Hampered by high running costs for buildings like barns, the cost of rents and rates together with other business costs is dragging them down.

Couple this with changing shopping habits of consumers, who are more likely to sit down and purchase goods when they want from the comfort of their own homes, and bricks and mortar retailers are facing major problems.

Some are looking at innovative solutions, such as sharing their buildings with other stores or giving over part of their premises to businesses that consumers cannot access from home – like cinemas or other entertainment venues.

Next in the firing line are department stores. Debenhams has already shut stores and warned about difficult trading conditions.

Amazon effect

Fashion discounter New Look admits struggling as well.

Neil Wilson, a senior market analyst at ETX Capital, said that the “Amazon effect is all too clear to see” for both Toys R Us and Maplin but that retailers can prosper if they are able to adapt.

“Ultimately this is a necessary shakeout of some out-dated retailers, which though terrible for those affected by job losses, is likely to mean a leaner, fitter retail market and a more productive use of capital,” he said.

“The question is whether there are more out there that could by the wayside.”

Toys R Us has already discussed the future of the firm’s direct benefit pension scheme with the government’s rescue service, the Pension Protection Fund.

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