D-day for retailers

This week, for the vast majority of retailers who haven’t renegotiated their rental agreements, rent falls due again for the next three months and it’s bound to put a strain on the cashflow of those retailers which are already on the ropes.

We’ve seen fewer retailers that we’d thought go bust this year but there remain a good number in intensive care, as the plight of Jessops highlights. Others are being watched nervously by their landlords and there will be a good deal of chasing and fraught conversations over the next week or so as the property companies try to get what’s owed to them.

Not a new thought I know but it really is about time this crazy ritual stopped. It is based on an ancient system which has no basis in modern business, and helps put struggling retailers out of business by putting unnecessary pressure on their cashflow at four fixed points in the year.

I know landlords get the benefit of getting their rent 90 days in advance, whereas all other suppliers have to wait to get their payment a similar length of time in arrears, but I imagine that it also causes a lot of disruption for them too, needing to have a team of rent collectors whose work is focussed on just a few weeks of the year. And they don’t want the empty shops retailer collapses cause.

The details are almost irrelevant though - fundamentally, the practice remains unfair and feudal. From what we hear some further retail collapses are likely before Christmas and rent day could well be what pushes them over the edge. There’s been some good work on monthly rents, but much more is required before they become the norm rather than the exception.