Rent-day casualties and tough trading conditions show retailers must be at top of their game to thrive.
Further high street restructuring is expected after harsh trading conditions claimed three retail scalps and proved only the strong will survive.
A continued squeeze on weak players is expected as the tough environment creates opportunity for stronger, more agile retailers.
Rent-quarter day contributed to the administrations of furniture retailer Dwell on Tuesday and toy specialist ModelZone on Thursday, while fashion retailer Internaçionale was expected to follow as Retail Week went to press.
Difficult times lie ahead for those not at the top of their game, industry experts warned.
“Only the strongest will survive,” said Richard Hyman, president of consultancy PatelMiller.
“There’s no growth in the market. In order to survive you’ve got to take business from the guy next door.”
Over-expansion, a failure to differentiate in a market already ravaged by weak consumer spending, and rising business costs have been pinpointed as reasons for the troubles at the three retailers.
Jonathan De Mello, head of retail consultancy at CBRE, said: “Though the retail sector is starting to show some solid signs of recovery, there are clear winners and losers, as we have seen with the recent administrations.”
Internaçionale, which has 145 stores and previously plunged into administration in 2008, struggled to battle against stronger rivals with clearer offers.
Last year, Internaçionale boss Raj Sehgal, the entrepreneur behind clothing supplier Visage, told Retail Week that the rise of Primark meant Internaçionale had to change its product offer to be more attractive. He said then: “We don’t want to compete with it but we wanted a point of difference.”
De Mello said: “Expanding too fast can be a dangerous game, as we have seen with both Dwell and ModelZone.
Both signed deals on the premise that performance would outweigh the relatively high rents they had signed up for in some centres - a premise that has ultimately been proved wrong in the cruellest sense.”
The retailers’ fates hang in the balance. Dwell closed all stores last week and it is feared there will be little buyer interest in the entire business but the brand may prove attractive. However, founder Aamir Ahmad is understood to be attempting to raise funds to stage a rescue.
Ernst & Young was expected to be appointed administrator of Internaçionale as Retail Week went to press. A pre-pack was thought to be on the cards and the owner poised to buy it back. As many as 40 stores could be shut as part of a deal.
Deloitte was appointed as administrator to ModelZone on Thursday. It is understood the 50-store retailer’s founder, David Mordecai, is preparing an offer to buy the business back. Mordecai left ModelZone last year to head Tobar Group, owner of Hawkin’s Bazaar, the toy retailer that itself entered administration in 2011.
Northern fashion retailer Ark, which has 17 stores, is also reportedly close to collapse.