Retail property law: the retailer is dead… long live the retailer

The retailer is dead… or is it?

We still need to buy things – food, drink, clothes, furniture… And we still want to buy things – coffee, cake, books, technology. What has changed, of course, is our ability to now buy things from the comfort of our homes, without needing to head out into the cold. As legal advisers covering retail property law,we believe we are well placed to understand the challenges retailers are currently facing.

So what do retailers need to do to get us out of the house and into their shops? This is one of the questions Mary Portas was tasked with when David Cameron asked her to undertake her review into the high street, back in 2011.

Portas’ recommendations in her report, The Portas Review focused upon retailers (as expected) and her suggestions revolved around helping independent retailers by cutting red tape, introducing flexibility around rates, disincentivising landlords from holding onto empty properties, creating strong leadership at council level, and free parking.

And the so-called ‘Portas Pilots’, twelve towns given a share of £1.2m, government support and access to Mary Portas have not quite delivered what was hoped, with almost 1,000 shops closing between 2012 and 2017, a drop of 17%. Even Portas herself has criticised the project as a ‘weighted PR campaign’ and complained it had failed to kickstart growth.

And what many commentators now accept as received wisdom is that instead of pure retail, the high street needs to transform into a leisure and entertainment destination – somewhere we can spend money not on essentials, but on experiences. And looking beyond the high streets, to some of the UK’s most successful town and out-of-town centres, this is exactly what is happening. The majority of shopping centres now blend retail units with food and drink outlets, either providing complementary offerings away from the more traditional ‘food hall’ experience, or losing the food hall entirely.

The bigger shopping centres have, of course, always blended entertainments with shopping – for example placing cinemas, bowling alleys or even, in the case of the Metro Centre in Newcastle-Upon-Tyne, a fun fair, at the heart of the action. And now others operating on the high street are starting to see similar moves. The Altrincham food market is a great example of independent retailers coming together to create an experience, a ‘sticky’ concept that keeps people on that particular high street for as long as possible; encouraging them to spend upon the enjoyable experience of good food and drink, and ideally also persuading them to purchase food and goods to take back home.

In addition to experiences, or perhaps complementary to, there is still a need for shops that people want to visit, to buy products they perhaps can’t buy online, or that they want to see in real life. Commodity goods are so easily purchased online, but hand-crafted, individual, bespoke or rare items can translate into ringing cash tills on the ground, as long as there are other complementary shops and entertainments in the locality to attract customers in the first place.

So, recognising the changes afoot, what can be done to help out high streets? Here at Ratio Law we obviously don’t have the same budget and insight as Mary Portas, but we do have many years’ experience in retail property law, helping retailers with their property requirements. Our recommendations are:

1. Increase flexibility.

The typical high street’s requirement for retail units has declined. Within minimal bureaucracy allow buildings to be repurposed for offices and residential developments; people living close to nice shops will be inclined to use them.

2. Review rates changes.

In 2017 the government revalued property for the first time in 7 years. And whilst this reduced rates for many retailers outside of the major retail centres, those with larger retail units in the busiest areas faced large hikes as a result. Ironically one of the major beneficiaries of the move was online retailers, who tend to locate their warehousing units away from the major centres. If the government truly wants to support the high street, it may now need to review its treatment of the online giants vs traditional high street retailers.

3. Devolve powers.

Local councils need to be given the power to self-determine and be creative in their partnerships with business leaders, landlords and business people. Give them the ability to develop retail and entertainment destinations and match ability with funding.

4. Encourage local entrepreneurs.

Anybody taking a risk and setting up a business that could benefit the local high street should be supported, and their exposure to risk minimised. Support could include seed funding, mentorship or reduced rents or rates.

5. Accept this is a period of re-adjustment.

One thing that strikes us is that things are always changing, and that the experiences we are going through with regards to the high street are simply indicative of the moving requirements of the public. The high street will never truly ‘die’, it will simply change, as it has changed many times in the past. There will be winners and losers, but ultimately the next few years will lay the groundwork for a new, hopefully improved high street experience for retailers and the public alike.

Retail property law experts: Ratio Law

Here at Ratio Law we have extensive retail property law expertise, with many years’ experience providing strategic legal service to retailers looking to relocate, enter new premises, expand or re-negotiate – we manage complicated legal transactions relating to retail property including conveyances and leases. We are experts in retail property law, having worked with retailers Bench, The RealBuzz and many more over the course of the past 20 years.

If you are a retailer requiring commercial property advice, get in touch with Ratio Law partner Joanna Norris for an initial chat on joanna.norris@ratiolaw.co.uk or 0161 464 9543.

The High Street or Retail Park: Choosing the Best Retail Location

In this post we pose the question; which is the best location for today’s retailers to do business – on the high street, or in a retail park?

Traditionally; retail parks were dominated by retailers of white goods, furniture and DIY items. However, in recent years there’s been a sea change, with ‘softer’ retailers such as Boots, Next and even banks such as Metro Bank moving in.

Added to this new type of retailer, the ‘leisure’ crowd have also taken a piece of the action, with cinemas, bowling alleys and restaurants fast becoming synonymous with out-of-town locations.

So which is better – the high street or the retail park?

Some retailers choose maintain a presence in both, for example – as already mentioned – Boots and Next. Others have very clearly defined parameters when it comes to store locations. Primark, for example, has just one retail park shop in Milton Keynes, and recently confirmed it would not expand into any other out-of-town locations.

Retail parks can offer convenience, free parking and those with a leisure element, a meal, movie or afternoon of bowling. Many are also home to a wide range of different retailers, and often provide the convenience element of an on-site or nearby supermarket.

In terms of benefits for retailers, these tend to include flexibility of space available, free parking for customers, and often a wide variety of complementary stores – which can help to draw the crowds. Of most importance for many portfolio managers is, of course, cost. Retail park rents are still typically lower than town centre properties, although the very popular centres sometimes buck this trend.

On the flip side, retail parks may struggle to attract the same levels of passing trade that high street retailers benefit from. Additionally, without the ‘draw’ of a heavyweight or flagship retailer such as House of Fraser or Marks and Spencer, retail parks can fall out of favour with shoppers. This can lead to a downward cycle with retailers moving out, and portfolio managers struggling to attract replacement tenants.

Although the high street has been described variously as ‘dying’, ‘on its last legs’ and ‘in need of help’, it has thus far refused to roll over and die. The benefits of the high street for retailers are varied. From a location perspective; high streets are often convenient for workers popping out for lunch or after work. British town centres also tend to be well served by public transport, although parking availability and costs may provide a hurdle when it comes to encouraging shoppers to visit from further afield.

Tourist attractions such as historical buildings, museums and art galleries should not be forgotten. These are commonly located centrally and attract tourists in their own right. Of course, these travellers can also be tempted into visiting nearby retailers.

In addition, the high street is also typically the home of the independent outlet; shops of course, but also restaurants and coffee shops, which remain attractive to a certain kind of shopper.

Finally, it’s important to consider the social aspect of shopping; that is an hour or two spent in the shops, and then lunch or even mid-afternoon cocktails. Whilst many retail parks have aped the retail/leisure mix often found on the high street, many shoppers continue to choose the high streets of Britain as their ultimate shopping and entertainment destination.

In essence, retail parks and high street locations offer different benefits and challenges alike for retailers. Existing or wannabe retailers should take careful note of these when making decisions about location, and must be careful not to rush into long and expensive leases before carrying out a detailed analysis of the pros and cons associated with both.

For information and advice on retail law, landlord and tenant law and property law matters, please contact Joanna Norris on 0161 464 9540, or by email: joanna.norris@ratiolaw.co.uk.

Posts Tagged ‘Retail law’