Opinion: Time for a reset of retail rent and rates

Face-to-face customer interaction can never be properly replicated online but, sadly, in a post-Covid world that has become the Achilles’ heel of bricks and mortar.

The decision I took five years ago to withdraw from the high street has never looked so serendipitous. Many retailers were already struggling with the same problems before coronavirus, and the idea that they will be able to reopen on June 15 and meet their overhead costs with a seriously reduced capacity to trade is the stuff of fantasy.

“I know of one major high street brand who, after testing these arrangements in a mock-up store, declared it would be nigh on impossible”

Yet plans are afoot that would have been unimaginable six months ago. The need to restrict customer access to stores and quarantine stock after it has been handled seems questionable in theory, and I suspect largely unworkable in practice.

I know of one major high street brand who, after testing these arrangements in a mock-up store, declared it would be nigh on impossible to trade while rigidly following the guidelines.

There are also plenty of worried staff, not confident in government advice that is undeniably a compromise on safety. I’ve spoken to many who are terrified of returning to work and others who simply won’t risk it.

Experiential retail – once vaunted as the saviour of the high street – is likely to be hit harder than most. Restaurants, pubs, music venues, cinemas and theatres will probably be the last to recover, making shopping trips something to be endured rather than enjoyed.

Queuing and one-way systems will leave high streets and shopping centres resembling airport departure lounges, complete with as much frustration and tedium.

“There may be less of an appetite to risk the threat of infection for a casual shopping trip that will be anything but casual”

While these conditions may be braved by the hardcore shopper visiting the larger, better-resourced stores, smaller operators, where social distancing may be impractical to the point of impossible, will struggle.

Meanwhile, online sales have more than doubled during the lockdown and research suggests that behaviour is likely to stick, meaning there may be less of an appetite to risk the threat of infection for a casual shopping trip that will be anything but casual.

As consumers’ confidence in government advice evaporates as fast as Dominic Cummings’ credibility, smaller retailers are faced with the Hobson’s choice of putting themselves and their staff at risk or operating at a loss.

Many, faced with the prospect of functioning on the edge of profitability as government support is withdrawn, may simply not bother to reopen their doors.

While I have huge sympathy for these businesses, it will be no surprise to my regular readers that shopping centre operators such as Intu bemoaning their losses haven’t exactly moved me to tears. Institutional landlords have lived high on the retail hog for decades now, and a reality reset was long overdue.

Likewise, the punitive rates system that we’ve been told many more times than we care to remember will be fixed one fine day. Well, the day has come for both landlords and government to pay it forwards. Certainly, if they’re expecting a return to business as usual any time soon, they are frankly delusional.

Clinging on to the retail gravy train as it hurtles towards the buffers is denying the inevitable. They need to hit the brakes.

A huge part of our economy is dependent on retail, with around 60% of retailers by number classed as smaller independents. For them, survival will be fragile at best, and expecting them to carry large debt in the form of deferred property costs or loans is simply not tenable.

The sooner shareholders and government ministers come to terms with that, the more likely it is that businesses will see a point in trying to pick up the pieces of our shattered high street for the long haul ahead. Only then will a future for physical retail as we knew it be a real possibility.