Boris Johnson has hit a chord!

It seems that landlords and organisations representing the larger retailers are not necessarily in favour of one particular sentence in the "Planning for a better London" report published by Mayor of London, Boris Johnson, in July.

I remember a conversation that I had a long time ago; it was a chance encounter on an aircraft flying into Leeds-Bradford airport. My passenger neighbour was the developer of what was then a new retail scheme being built in a North Yorkshire spa town. I asked him his opinion on the issue of anchor stores in this sort of scheme and I admit that I did start to preach to him just a little about the disbenefits of offering peppercorn rents solely to the 'usual suspects' from the corporate world of retail and suggested that there were many benefits to be accrued to the scheme and to the 'uniqueness' of the centre if a similar offer were available to a local 'anchor. I was delighted to hear his response; he told me that he had already been doing some work on precisely this notion and I could expect to see incidences of this phenomena in the future.

In my travels I have become aware of increasing numbers of independent retailers taking space in major centres but I am equally aware that they are not offered the same terms as their better known neighbours - yet they have to comply with the same conditions and standards of trade. In the case of one well known Mall in the north of England I know that one year leases are the norm. It is very restrictive on a growing business if the level of investment that you make in your store is premanently reflective of an investment of just one year. It is another example of the imbalance of opportunity that exists in the world of retailing. If you are able to convince a backer to loan you the capital to invest in a chain, then you would immediately attract better rates - notwithstanding the potential that your business might have if the economy was to suddenly find itself in a potentially recessionary phase. If, on the other hand, you are hard working and wish to grow your business organically in a way that is fiscally more sound then you will apparently be penalised by the landlords.

I, for one, think Mayor Johnson should be congratulated on his proposal to use section 106 agreements with developers to ensure that they provide affordable space for small businesses. I notice however that the landlords foresee doom and gloom and that all sorts of unintended consequences will issue forth from this decision - perhaps they will, the nature of unintended consequences is that they were not planned; I'd throw out the challenge to the landlords and their representative organisations - tell us what you believe to be the likely consequences that Mayor Johnson is leading us into, and let those of us without a directly vested interest in the issue make a judgement. Until then I will end by simply saying that I am still waiting to see the phenomena of local anchors in new schemes and "Well done Boris!"

Time for Government and Landlords to think!

The Finance Secretary in the US Administration has warned of grim times ahead in the US economy; Tesco has ordered cost cutting measures; Pre-Easter sales are being unfavourably compared year on year - there do seem to be a number of reasons for all retailers to be intensely aware of their costs.

For smaller retailers the largest costs tend to be staff and property - staffing in SMEs is generally at a higher level (number of staff against pound for pound spent in store) than in larger organisations so this might seem to be an easy step to take in reducing costs - except that in smaller units, a single member of staff is a significant percentage of the whole and can make the difference between making sales, having security, or even just trading for a whole week with adequate cover. Legislation now dictates the maximum number of hours to be worked as well as the minimum pay for that work; this doubles the pressure upon SMEs to limit the number of jobs available for the very people that Government is trying to protect - and it is a case that either the SMEs do impose these limits or else there will be no jobs at all in that sector, something that will do the least well paid members of society absolutely no good at all.

The issues relating to occupancy costs are legend and need not be rehearsed here, but an interesting observation has been reported by Jennifer Creevy in 'Retail Week' and commented upon in an editorial; she reported comments made by William Landale the CEO of Lombok, a furnishing retailer. He is reputed to have said "I hate Landlords"; and can't we all sympathise with Mr Landale for that heart-felt utterance? Of course, Mr Landale was probably not actually sticking pins into a doll version of any particular individual landlord when he was being quoted. Mr Landale was actually commenting that landlords seem to be oblivious to the trading environment of their tenants, and there not being any established mechanism for rents reflecting the levels of trade actually being achieved.

Retail Speak believes that this is a situation that has to be resolved - as the trading conditions deteriorate in this cycle, it would be sensible for agreement to be reached where rental agreements are linked to trade levels - it could offer a fair return for landlords, a more realistic base for the retailers to build their businesses from and level the playing field for the game between the larger and smaller players in what is currently an uneven place indeed.