The recent Maplin collapse in the UK is another consequence of a general shift towards online shopping. Maplin folded on the same day as Toys R Us announced it was going into administration. It is difficult to view the collapse of these previously successful businesses as anything but internet related.
Maplin Collapse Due to Online Competition?
While businesses such as Amazon and Alibaba grow, traditional physical mall stores suffer – even those with an online presence. Why is that? It seems to indicate that increasing numbers of people prefer to shop for certain types of goods online, particularly from online stores offering a wide range of options.
Neither Maplin nor Toys R Us is able to offer the range of goods available in their own specialty than these two onli9ne businesses, particularly Amazon.
Closure of Maplin and Toys R Us Will Cost Around 5,000 Jobs
Between the two, the closure of Maplin and Toys R Us will result in the loss of over 5,000 jobs. These are not small insignificant businesses, but two of best known retailers in the UK. Maplin employs approximately 2,500 staff in over 200 stores, while Toys R Us will be laying off around 3,000 employees.
According to Moorfields, the administrator for the Toys R Us windup, there is still the possibility of a last-gasp buyer taking over Toys R Us. If not the entire business, at least the newer stores. Meantime the Toys R Us stores will remain open, and the same should be the case with Maplin outlets which will continue doing business during the administration process.
Why Did Toys R Us and Maplin Collapse?
Reasons given have been the fall in the value of the pound sterling and low consumer confidence after the Brexit vote. Credit insurance has also been withdrawn from the business. The firm has consequently found it impossible to raise the capital it needs. Administrators PwC has stated that it will seek a new owner for Maplin.
The main issue is likely the move by the public towards online retails. A store such as Amazon offers services generally unavailable when you walk into a mall store. Product reviews are prominently published on internet sales sites, together with a number of price options where available. You can also find full descriptions, specifications and warranties for the products on offer.
Import Costs and Online Competition to Blame?
PwC has stated that existing customer orders will be delivered, and that gift cards will also be honored in stores while they remain open. There are no plans for now to close stores.
UK High Street and mall chain stores have been suffering from online competition and also from the cost of imports that have increased due to the downturn in the value of the pound sterling. Maplin and Toys R Us are two of the few high profile firms who have suffered from this.
The Toys R Us and Maplin collapse will not be the last. There will undoubtedly be more in the future. For now, these two stores will remain open for business, but their futures appear to be very limited.
