Decreased consumer spending and increased rental rates are pushing many of the country’s top retailers to an uncertain financial state. Two UK retailers, the fashion chain Internacionale and children’s toy shop Modelzone, will enter administration after being unable to make their monthly rental payments.
The two retail chains are certainly not the only high street businesses to run into financial trouble in recent times. Furniture retailer Dwell, which employees 2,000 people across the UK, recently entered administration after falling profits and an especially tough retail market began to cause lasting financial issues.
The downturn in retail spending – and the health of many of the nation’s top retail businesses – has been called the ‘high street downturn.’ Across the UK, particularly in regional towns that previously depended on ‘town centre’ areas, retail spending has taken a nosedive.
Retail analysts have blamed the downturn on a variety of factors, including online rivals such as Amazon.com and the proliferation of suburban shopping malls. Many of the country’s top retail high streets are now forced to compete with large malls that are often conveniently located and home to numerous ‘big box’ retailers.
Modelzone, one of the two companies to enter administration, suffered from losses of over £600,000 in the last twelve months despite earning revenues of over £27.3 million. Internacionale, the fashion brand, employed over 900 people in the UK and operated over 140 stores at its commercial peak.
The high street downturn has taken its toll on both big and small businesses, with a growing number of well-known brands entering administration. HMV, Blockbuster, and Jessops have all experienced severe financial difficulties in the last year, with a number of leading chains entering administration.
