Administrators have been called in by Intu, the owner of some of the biggest shopping centres of the United Kingdom.
No agreement had been reached in its negotiations about financial restructuring with its lenders, the company said previously. the company owns the Trafford Centre, the Lakeside complex, and Braehead.
Under administrators KPMG, those centres will stay open.
The shares of the company listed on the London and Johannesburg stock exchanges had been suspended, the company said.
Richard Lim, chief executive of Retail Economics said that the significance of the collapse of Intu “cannot be understated”. He said that there is a fast growing trend among consumers to purchase more consumer goods online since the lockdown imposed because of the novel coronavirus pandemic.
He estimated that about 50 per cent of workers normally are not able to receive parcels at work. But since the pandemic and the lockdowns, more and more companies have imposed work from home formats for employees which has forced many more people to spend most of their time at home. At the same time, making car journeys to shopping centres has also been discouraged. This has prompted more people to order products through websites.
He said that the manner in which landlords should react is difficult to assess and a single solution would not work for every mall.
If the number of people working from home increases, shops at large office developments like Canary Wharf would be the worst affected by the trend.
“It’s going to be a really, really tough challenge. There’s no getting away from the fact we have too much retail space,” he said.
He said that for landlords to attract retailers with new ideas, shorter, flexible leases can be offered by them even while the latest trend will likely force more retailers and shopping centres to close down.
Three administrators at the KPMG accountancy firm have been appointed by it, the company said, and added that “the appointment is expected to become effective shortly”.
With 17 centres in the UK, the company was one of the biggest shopping centre groups of the country.
With a debt of about £4.6bn, the company had been facing serious problems even fore the UK was hit by the novel coronaviru pandemic. The shopping centres of the company are not included in the administration which only includes the parent company. The shopping malls are separate companies that are owned by a myriad of banks and lenders.
And they’ve now got the keys. Shoppers aren’t likely to notice any real difference in the short term. But buyers will be sought.
Manchester’s Trafford Centre is arguably the most important shopping center of the company which is followed by Lakeside.
But the current turmoil in the retail industry right now, it could be a difficult task to sell the less popular malls of Intu.
For Intu, the business model was simple – it continued to make purchase of more malls with changes in shopping habits of consumers. However it ended up with a huge debt pile. And the pandemic has compounded its problems.
(Adapted from BBC.com)