If anyone thought the failure of Comet in December was a low point for the high street, then the events of the past few days have highlighted the scale of the challenges facing the retail industry.
In the space of less than a week, Jessops, HMV and Blockbuster have called in administrators. The failures could lead to more than 10,300 job losses and almost 1,000 store closures.
The consequences of the administrations threaten to spread throughout the economy.
According to CBRE, the property agent, retail administrations since the onset of recession in late 2008 have cost 198,000 jobs and £1.48bn in rent for landlords, who include some of the country’s biggest pension funds.
In the most recent wave of failures — including Comet — 53 towns in the UK have seen two or more stores fall into administration.
The south east has been the worst-affected, with 23.7pc of the stores affected. But the problems have stretched across the country, with the north west accounting for 10.3pc of impacted stores.
According to the Local Data Company (LDC), the past month could end up being the worst on record for store closures. “The administration and potential closure of over 1,400 stores in less than a month far surpasses Woolworths’ 807 in January 2009,” says Matthew Hopkinson at the LDC.
"This has the potential to increase the national shop vacancy rate by nearly 5pc to an all-time high of over 19pc if all the stores close and are not reoccupied.”
However, despite the prospect of almost one in five UK shops falling empty, suggestions that we are hearing the death knell for the high street are premature.
For a start, less than half of the shops that have fallen into administration in the past month are on the high street.
According to the LDC data, 45.6pc of the stores are high street units, but 19.5pc are in shopping centres, 17.5pc on retail parks, and the remaining 17.4pc are stand-alone locations.
Indeed, the worst-impacted locations are Heathrow Airport and Ealing Broadway shopping centre in west London, which have seen five shops fall into administration.
Secondly, the retailers that have collapsed faced specific financial and structural problems, and have long been on the watchlist of worried property companies and banks.
Blockbuster, for example, has struggled in the face of film download services such as Netflix (NasdaqGS: NFLX - news) , Lovefilm and iTunes. Its US parent company filed for Chapter 11 bankruptcy protection three years ago and the UK business survived only because it was bought by pay-TV provider Dish Network (NasdaqGS: DISH - news) .
The failures of HMV, Blockbuster and Jessops occurred close together because January is the optimum time for creditors to call in administrators. The shop tills are full of cash and shop stock is at an all-year low.
Jon Copestake, retail analyst at the Economist Intelligence Unit, said: “A theme is beginning to emerge on the high street as sellers of obsolete products using outmoded channels and inflexible business models see their creditors waiting until after Christmas to call in debts.
“The administration of Jessops last week has opened a floodgate of administrations on the UK high street and Blockbuster is just the latest 'zombie’ company to bite the dust.”
The demise of these “zombie” companies should free-up market share for retailers that are prepared to invest and expand. However, there is no doubt that the remaining retailers and the high street still face substantial challenges.
Jonathan De Mello, head of retail consultancy at CBRE, said: “In terms of a prognosis for retail in 2013, now HMV has entered administration, there are very few similarly heavily-indebted big names left. It is unlikely therefore that 2013 will be as bad as 2012 in terms of major retail administrations.
"However, for every retail administration we have seen, there are many other otherwise healthy retailers looking to downsize their store portfolios in all but the best retail centres, given changing consumer habits and the consequent redundancy of some of our high streets.
“Whilst retailers will come out of the current downturn leaner and meaner, some of our high streets are in terminal decline. Given this, retail vacancy rates will almost certainly rise this year, whilst we are likely to see fewer major retailer administrations and job losses in 2013 than 2012.”