Maplin

With the collapse of some of the High Street and Out of Town Retail Park big names we sometimes find that these commercial properties evolve to become the premises for other businesses or for other uses.  As Building Surveyors who specialise in retail premises we believe it is essential to have a commercial building survey if you are buying a shop freehold as it will save you time and money.  If you are taking on a shop lease then a Schedule of Condition will help you to limit any future liabilities which can be very costly if you are not protected with a Schedule.

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In this article, we look at the popular store Maplin and its collapse.

Maplin Collapse into Administration

History and Background of Maplin

Electronics goods retailer Maplin (Maplin Electronics) is a known seller for electronics components, computers, communication devices, and various consumer electronics. The business has been operating in the UK and Ireland since 1972.1 With its continuous growth and expansion, Maplin established its first overseas operating center in Taipei on 1992 to strengthen its sourcing, purchasing, and shipping power. Just 3 years after, a Hong Kong Office was established in 1995. The business success is reflected by the four consecutive acquisitions that occurred in a span of 20 years since 1994 when it was acquired by Satire plc to be later passed on to several hands until it ended up with Rutland Partners.2 As of June 2017, the number of operating stores reached 217.

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Administration and Closure

On February 2018, the company was reported to be seeking a buyer among other retail giants. It was reported however that if Maplin could not find an outright buyer, it would enter a pre-pack sale arrangement wherein it would line up a sale before going into administration. The sale would benefit the new buyer and would end up having the most profitable assets. However, Maplin was not able to find and raise the needed capital to save its business. 3

On March 2018, the private equity firm Rutland Partners finally bought the retail business into administration through MEL Topco.  Rutland Partners bought Maplin from Montagu Private Capital in 2014. Over 2,500 jobs across the UK were lost due to the close down.4  Closing down posters reading “everything must go” and “store closing” were placed over their stores window shops. Goods discounted up to 10 to 50 percent can still be brought from these stores at competitive prices compared to their rivals.6

Unlike the failure of Toys R US which was expected due to its slow response in expanding its services to multi-channels like online shopping and small local shops, Maplin’s closure was quite of a shock. It was only a few days before the close down that Maplin even announced its opening of a new store.

Stores to Shutdown

Maplin, at the time of writing this article, has 217 stores across the UK. After the administration, the stores are still operating selling the electronic goods at discounted prices until supplies last. Here is the list of stores that have already closed or about to shut down. This list is not exclusive. Beckton, Bromley, Camden, Canary Wharf, Chadwell Heath, Charlton, Clapham Junction, Croydon, Ealing, Edmonton, Enfield, Forest Hill, Great Portland Street, Hammersmith, Harrow, Holborn, Kensington, Kingston Upon Thames, London Liverpool Street, Marble Arch, Monument, New Malden, Putney, Queensway, St Pauls, Staples Corner, Strand, Stratford, Streatham, Sutton, Tottenham Court Road, Tottenham Hale, Uxbridge, Wembley, Wimbledon, and Wood Green.7

Cause of Closure

The business has been severely affected by the impact of Brexit which created a weak consumer environment and withdrawal of credit insurance. The closure was also attributed to the insolvency of Maplin when it was acquired by Rutland Partners in 2014 from Montagu.

Maplin’s net debt had grown to nearly half a billion pounds in 2012. £68.9m of the said debt was accrued interest, and the shareholders’ deficit was £320m. Montagu Capital’s inflated charges had caused the once healthy growing company into debt. Rutland Partners, a distressed debt specialist took the risk and paid £89m for Maplin. Most of the said payments however just went to clear Maplin’s remaining debt. It was said that Rutland overpaid Montagu when they acquired Maplin and if only the right amount was paid, the company may still be alive today.8

Maplin head offices in London and Rotherham faced redundancy after entering into administration.9

The Brexit, low consumer spending, competition in multi-channel, and unsustainable rent costs are the reasons why retail giants are closing down across Europe. Commercial establishments, banks, and restaurants are feeling the impact as people are shopping more online and spending less. As a result, in order to keep their businesses alive, retail chains are cutting store after store just to keep their business going little longer.10

What does this mean?

As more retail giants are shutting down and closing their stores across Europe, commercial spaces are increasing in availability with rents falling due to the decrease in demand. Some of the stores that continue to operate after administration are just waiting for their remaining inventory to be sold or their lease contract to expire. This process can take several years.11 12  Aside from the opportunity of consumers to purchase goods from these stores at the brink of closure at discounted prices, this also creates an opportunity for other retailers especially new players to put up their own shops at a lower cost and pick up from where these giants have left and for some stores to be changing to alternative uses.

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References

  1. Maplin Electronics. The Green Consultancy. https://www.greenconsultancy.com/case-histories/maplin
  2. Neal Baker. MAPLIN BUST Maplin store closures – why is the company going into administration and which shops are closing? The Sun (1 March 2018). https://www.thesun.co.uk/money/5691799/maplin-store-closures-administration/
  3. Maplin in talks with potential buyers. BBC News. (20 February 2018). http://www.bbc.com/news/business-43121649
  4. Frances Coppola. The sad story of Maplin Electronics. 7 March 2018. http://www.coppolacomment.com/2018/03/the-sad-story-of-maplin-electronics.html accessed 20 April 2018
  5. Paul Kunert. Maplin shutdown sale prices still HIGHER than rivals. The Register. (14, March 2018)  https://www.theregister.co.uk/2018/03/14/maplin_prices_still_higher_in_closing_down_sale/
  6. Lottie Gibbons. Liverpool’s Maplin store is closing down – and there’s a HUGE clearance sale. Echo. (9 March 2018) https://www.liverpoolecho.co.uk/whats-on/shopping/liverpools-maplin-store-closing-down-14388864
  7. Laura Onita. Maplin administration: full list of London stores facing closure. Evening Standard. (28 February 2018). https://www.standard.co.uk/business/maplin-administration-full-list-of-london-stores-facing-closure-a3778041.html.
  8. Frances Coppola. The sad story of Maplin Electronics. (7 March 2018).  http://www.coppolacomment.com/2018/03/the-sad-story-of-maplin-electronics.html
  9. Caroline Donnelly. Maplin in administration: Internet connectivity issues hit in-store card payments. Computer Weekly. (20 March 2018) https://www.computerweekly.com/news/252437190/Maplin-in-administration-Internet-connectivity-issues-hit-in-store-card-payments
  10. James Andrews. Which stores are closing down in 2018? Full list as Carpetright and Toys R Us confirm they are shutting more branches this year. Mirror. (12 March 2018) https://www.mirror.co.uk/money/hell-high-street-maplin-toys-12102206 accessed 20 April 2018.
  11. Helen Barnett. March 7, 2018. New Look to CLOSE 60 stores with 980 jobs at risk – is YOUR local shop at risk? Express. https://www.express.co.uk/news/uk/928404/new-look-closing-shops-shut-job-losses-latest-news-british-high-street
  12. Jennifer Duell Popovec. July 02, 2015. Retailers Waiting for Lease Expirations to Close Stores. National Real Estate Investor. http://www.nreionline.com/retail/retailers-waiting-lease-expirations-close-stores