It is amazing to think how many high street businesses have been consigned to the graveyard. It is difficult to know what can be done about it. There are the usual mooted suggestions- business rates cuts, greater use of 'click and collect' options by stores etc. However, I was interested to read this article in Retail Week:
http://www.retail-week.com/sports-direct-offers-turnover-deal-on-republic-stores-rent/5047295.article?blocktitle=More-News-and-Insight&contentID=5271
Republic, the fashion chain, was bought out of administration by Sports Direct (SD). SD offered Republic's Landlords 15% of the stores turnover to cover rents, rates and service charges. SD claims that 'given the number of voids on the high street, retailers’ relationships with landlords are coming to the fore. We’re doing something that’s really innovative that should be mutually beneficial.' Voids means empty shops and units. SD have also signalled that the new contracts would retain some flexibility, so that Landlords can walk away if they become unhappy with the arrangements.
The last part is interesting- the proposal by SD should be mutually beneficial to both Tenants and Landlords. This could indeed mark a sea change in the retail industry. Previously, I had written about how H & M had delivered a tough new set of Lease proposals to its Landlords. SD's proposals are completely different and a breath of fresh air. Landlords get their rent and have an interest in the continuing success of the businesses. Times are tough for Landlords- we are all aware of the rent problems they face after an administration, CVA or pre-pack deal. Landlords are caught between a rock and hard place in Lease negotiations- trying to protect the value of their investments (and the interests of their fellow investors by getting a good rent deal) and satisfying the Tenant who could walk away. SD's plans could mark a complete shift in the relationships between commercial Landlords and Tenants. Plans where both parties have a stake in the continuing success of the business and its property portfolio. We shall have to watch this space as to whether or not such proposals become commonplace in the retail industry.
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