As only the second retailer in 26 years to take over as president of the British Council of Shopping Centres (BCSC), Jeremy Collins is in a rare position. A self-confessed poacher-turned-gamekeeper, with a long career in the property industry behind him, five years ago Collins decided to turn his hand to retailing at John Lewis and has since taken a key role in its store expansion.
Some might say there could be happier times to be taking over the helm of a retail property body. With retailers fighting for survival and landlords struggling with a number of woes, it is hardly set to be a harmonious presidency. But perhaps there is no better time for the BCSC to be headed by a man with a thorough knowledge of both sides of the industry.
“It’s a great opportunity to be one of a few retailers represented in the BCSC forum,” says Collins. “I’ve learnt a tremendous amount in the past five years about what makes the retail business tick. I’ve gained a different perspective and a more rounded perspective than I had when I was just working in property.”
An unfortunate side effect of a worsening climate is that landlords and retailers tend to fall out. Rental periods, service charges and lease terms can become bones of contention when both sides are short of cash and the idea of mutual interest tends to be forgotten. But this, says Collins, is exactly the kind of problem he intends to fix in his time as president.
“When I first joined John Lewis I was appalled by how adversarial and feudal the landlord/retailer relationship was. There should be a greater awareness and empathy with the plight and challenges the retail sector faces in the short term, but there’s also a need for landlords, developers and investors to achieve a sustainable return.”
He adds that there is a need to support retailers through the immediate challenges they face with sales and revenue, which are compounded by shrinking margins. “Profitability is collapsing and the short-term future is very bleak. The property industry needs to look at the costs that affect retailers,” he warns.
The most contentious areas, Collins continues, are those of monthly rents and service charges. Not only do they add extra cost, he believes they are also areas where there is the greatest potential for reconciliation if only a proper discourse could be achieved.
“The question is: what areas of costs can be reduced? A move to monthly rents would ease cash flow. What’s more critical in terms of reducing costs is to look closely at service charge and what constitutes an appropriate level of service and an equitable cost. It could be significantly reduced,” he explains.
The issue of monthly rents has received a substantial number of column inches in the national press and he attributes much of this to the fact that one of the most outspoken and ardent backers of the campaign is Arcadia boss Sir Philip Green. Since Green and other high-profile retailers such as Carpetright’s Lord Harris and Next’s Simon Wolfson joined the debate, the campaign has gained plenty of momentum.
Collins believes the retail sector owes Green a great deal because his support for monthly rents has drawn national recognition to the issue. “What he has done very successfully is to prove this isn’t just retailers crying wolf. He has done a tremendous job and proved to be a real asset for the industry in terms of getting recognition in the property sector of the commercial need to shift costs,” says Collins.
Collins says it is vital that areas of mutual interest between landlords and retailers are emphasised, especially given that during turbulent economic times the relationship risks becoming more adversarial.
One of the ways he plans to do this is to bring about a better understanding between retailers and the property industry. He says that the key to this will be to provide forums for discussion and for the BCSC to be the body that both industries turn to for authoritative and informed research.
BCSC already runs a forum aimed at promoting discussion between the two industries – the Retail Liaison Taskforce – but under Collins’ presidency its profile is likely to be stepped up. He plans to form a new Retail Forum to run alongside the existing taskforce to encourage more discussion, debate and research.
He says: “The BCSC has a very clear and crucial role to play in helping to provide leadership and research into what the solutions might look like. I want to establish much better relationships with retailers this year. I want to get to know about their hopes, fears and concerns so that we can get a more meaningful engagement between the industries.”
And time is of the essence, he warns. A bleak picture emerged over Christmas and retailers face a serious struggle in 2009. The toughest period of all might prove to be the next two and a half months leading up to the March quarterly rent deadline.
Another worrying area for retail property in the longer term is the development pipeline. With credit lines drying up, developers are facing serious problems moving schemes forward and there are already a number of notable examples of projects being put on hold, such as Hammerson’s Sevenstone in Sheffield and Modus’ Friars Walk in Newport. Collins is adamant this is a real concern for both retailers and developers.
He says the BCSC can act by putting pressure on the Government and local authorities to move to stimulate development. As well as being new president, Collins has also been head of the BCSC’s Government Affairs Committee for the past five years. It serves to highlight the key issues affecting retail property through research and discussion and use these findings to lobby the Government on behalf of its members.
“There is going to be a very much more proactive role that government and local authorities can take to maintain some momentum in these projects, particularly where they are of strategic importance,” he says.
With the strong line of previous BCSC presidents that have gone before him, Collins has the responsibility of continuing a proud tradition. BCSC has been integral in raising awareness of crucial retail property issues for the past 26 years and rarely has that been so crucial over its lifetime.
Last year, under outgoing president Martyn Chase, the council launched its Sustainability Charter. Laying down clear guidelines for developers and ministers to bring retail property up to proper standards of sustainability. The report was widely praised and well-received in government.
Collins says: “I want to continue to build on the good work my colleagues have done. I want to build on their agenda and ensure that BCSC becomes a centre of excellence in some key strategic areas.
“We’re going to work with the British Property Federation and the British Retail Consortium to build on the Sustainability Charter and prepare both industries for carbon reduction credit legislation due to come into effect in 2011.”
The fundamental point, says Collins, is to get everybody behind a unified set of ideas. He says unity and togetherness – at the core of his ethos looking ahead – will enable a more successful partnership to emerge and put the BCSC in a better position to lobby the Government. “We need to get all of our perspectives together. It’s about linking up the implications for all sides. Collective pressure needs to be maintained. The whole empty rates question has to be a constant issue on the Government agenda until they change their mind.”
He adds that the Government has “effectively increased the level of taxation through rates on business fantastically and it’s unsustainable to keep that going”. He adds: “There are steps that they could take. They need to understand the real benefits that would come if they do and equally the serious impact if they don’t.”
What retailers want is to be understood and listened to. Collins may have originally been a property man, but he is now retail through and through and is determined to open up channels of communication between both sides. With a tough year ahead, the incoming BCSC president is intending to waste no time in getting a dialogue going. “If as a retail property industry we’re going to get some real progress for retailers, we need to see some real changes this year,” he concludes. Next year, he warns, will be too late.
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