Here is a question for your next Zoom quiz with the family; what do Costa Del Sol, Xanadu, and Derby have in common? You'll have to ask it quickly, as the answer may be different next week now KPMG have been appointed as Administrators over the gargantuan shopping centre owner Intu today. Huge doesn't really do the latest and largest casualty of the pandemic credit. 1.1 million square feet of retail in Glasgow, Europes's largest covered shopping and leisure centre in Sheffield, luxurious marble halls and iconic retail at The Trafford Centre, Manchester. Intu had it all. Well, it still has in case anyone reading this is concerned that they won't be able to go to a shopping centre the size of Lithuania and buy soap and pricey chocolate tomorrow.
Covid may be rubbing its hands after what it may consider to be its greatest victory yet, but is this really true? The group has struggled under a £4.5bn debt burden for the past year, having been hammered by significantly lower rent payments from retail tenants. Intu had been one of the London stock market's worst performers last year, with its shares down almost 90% in 2019, and equity investors now face being being wiped out by this collapse. The pandemic may have flicked the giant retail business over the cliff with a disdainful finger, but this is after it had been run over by two trucks and fed through a blender in the months and years before anyone had even heard of a pangolin or the wet markets of China (allegedly ...).
As for KPMG, they have a job on their hands. Intu directly employs nearly 3,000 people, but is a disproportionately important player in many of the UK's regional economies, with a further 102,000 people working in its 17 UK shopping centres. The failure of the business will involve one of the most complex Administrations seen in Britain's property industry for years. Those who follow the press will know that this is almost certainly the result of boardroom miscalculations, questionable investment decisions and the failure to grasp the changing shopping environment over the years. Does the average British shopper really want to trek up five escalators to a food hall, when they can walk three metres across their kitchen to the fridge having bought fashion, cosmetics and sunglasses online?
Will rival companies be calling the Administrators this evening asking for a rounded-down price on the back of an envelope? How many retailers need to go down before we all start asking real questions about the future of shopping?