Labour appear to be suffering as politics has become slightly more complex, at least in terms of the ability of parties to more specifically target particular groups. If you think in terms of that well used political compass quadrant that placed you left/right on both economic and social factors, the Tories are going after those who are 'right' on both. UKIP (and to a large extent Trump, Le Pen, Wilders et al) are going after those who are left wing economically (protectionism, welfare state for nationals etc.) and right wing socially (immigrants are bad, tough on crime etc.), the Lib Dems seem to be plumping for those who are centre right economically, and left socially, which leaves Labour in a muddle.
Traditionally they would counter the Tories by being left/left on both measures, but many of their northern constituents aren't socially left at all, hence why UKIP and the populists have managed to gain ground in Labour strong-holds. Ostensibly I don't believe Labour are naturally that way inclined, but they're struggling to reconcile their previous position as the natural home for the left, with a new more marginalised power, as the right wing social values of many of their present/former voters have taken precedence and found a more natural home with UKIP, who pander to both their economic and social values.
I do wonder if we're not leaving the traditional era of single party dominated governments and entering one of more consortia led governments as is common throughout Europe.