Labour are in a difficult position. To win they have to both keep their core supporters while also attracting the "middle" ground.
(All of this is IMO ...)
Back in 2015 when Jeremy Corbyn was first elected, he offered an alternative to "New Labour". If the PLP had got behind him then it could have been possible for Corbyn to lead a successful Labour Party but they didn't. From Day One various members of the PLP were back biting and second guessing; they could have supported and given help but they didn't. They are as instrumental in Labour's poor position as Corbyn. A campaign to remove Corbyn was essentially started on the 14th September (they rested on Sunday).
Fast forward though Corbyn's first 9 months and while the MSM were targeting and belittling Corbyn, the Labour party were still making modest gains - perhaps not as much as they needed to to retake power; but there were gains. Corbyn was starting to find his feet as a leader. Then the referendum and the sky feel in for Labour ... instead of fighting the Conservative party and their divisions and difficulties, instead of taking advantage of their floundering the PLP turned on Corbyn: Corbyn who (in my opinion) was the only one who recognised that the EU wasn't the utopia that the rest of Remain were portraying, but actually presented some facts about what the EU had brought core Labour supporters as well as realising that life outside the EU was going to be far from rosie.
As a result, there was a leadership challenge. The eventual challenger Owen Smith essentially ran on a platform of "I'm quite like Corbyn in my politics (despite my previous employment) but I'm not Corbyn". As a result, Corbyn dug in deeper and the failed coup has essentially made Corbyn unremovable as leader unless he steps down (IMO) while showing how truly divided the party is.
The problem at the end of the day is do you support principles or need a more pragmatic approach. Corbyn sticks to his principles and is criticised as only being interested in protest; Nick Clegg takes a pragmatic approach in joining a co-alition and he is a traitor to himself and his supporters despite his attempts at moderating the worst "excesses" of Tory cuts.
@BigH47 above comments "electable for the Labour Party seems to lead to Tory Light and that doesn't help really, do we really want another TB" but if you exclude the biggest issue (the unequivocal support for George W. and the Iraqi invasion) which admittedly was a REAL BIGGIE; didn't his government do a lot of good for the people of the UK? BigH then goes on to suggest David Miliband (he couldn't be leader as he's not a member of parliament) or Chuka Umunna ... are both of those not just TB clones in their policies and therefore Tory Light?
As Blair campaigned on ... a Third Way is exactly what we need ... I'm not suggesting that Blair got everything right ... but there needs to be a middle ground and Labour jumping back left will not gain power.
There is a big problem though in this country (and it is similar to USA) is that while the country is (or was) prosperous; that prosperity wasn't benefiting everyone and Labour's core supporters were the ones loosing out. As I've likely commented before, this goes back a long way before TB and into Thatcher's regime. With the closing of the pits and large swathes of manufacturing (and I'm not arguing that moving away from minings and heavy manufacturing is in itself bad) a large group of people have moved from having jobs which while hard work did give them a purpose and give them the opportunity to care for their family. Unless you are university educated, these just isn't many of those possibilities these days.
People like UKIP (and the Tories to a lesser extent) would have you believe that these problems are caused by immigration. But they aren't in the main. The Labour Party tried to put that opinion out there and failed - Gordon Brown's comment about Gillian Duffy in 2010 was the pinnacle of that failure. Remove immigration and there will still be a housing crisis, will still be a lack of investment in the NHS, still be failings in the railways.
So what is the answer to Labour's problems; what will make the middle ground vote for Labour - and this is just my opinion of course based on what I read and people I talk with - again? Well first off (and this goes for LibDems if they hope to gain seats at the 2020 election) they need to set out their vision for UK outside of the EU. Article 50 IS going to be triggered (and I'm not sure fighting harder against that would have been of benefit - personally after their amendments were all defeated I feel they should have abstained but equally I don't think that would have played well with their current fights in Stoke and Copeland nor helped in the long term fight against the Tories "hard" Brexit strategy) so they have to look at this as the starting position. Show up how poor Tory's planning is. Set out hard limits; things you believe in and stick to. And stop with the "if you don't do this we'll be worse of" ... show how we (the UK) will be better off with your plans; people want to know the positives of your plans not just the negatives of the opposition.
Labour also need to concentrate where they are strong ... the NHS. Never let people forget how bad the Tories are managing the NHS. But you also need to try to get the message across the Labour party can be trusted on the economy - Labour are still loosing that battle and loosing it badly. The 2007/8 crash / recession is the main obstacle Labour have to get over - even though in the main it was nothing that Labour could have prevented and Labour policies didn't cause it. You can't ignore it.
The answers are not simple (I'm not even sure if there are answers); however if the answer to a complex question is simple, then its likely not really answering the question.