Friday, 4 October 2019

Yay! Go John Lewis!

From the BBC:

John Lewis is seeking discounts from its landlords to cut costs, in a highly unusual move that highlights the huge pressures on retailers.

The BBC has learned that the retail giant has been telling landlords in some locations that it will withhold 20% of this quarter's service charge. These are the fees retailers pay on top of rent for services such as heating and security. John Lewis said the charges had become too high and urged landlords to help...

Debenhams has managed to slash its rent bill with reductions of up to 50% after securing a restructuring deal with its creditors. Struggling retailers have been turning to these so-called company voluntary arrangements as a way to cut costs. House of Fraser was bought out of administration by Mike Ashley's Sports Direct and many of these stores are currently paying little if any rent.

John Lewis are just nibbling at the edges here, the service charge is only a fraction of the rent, and they are only withholding a fraction of the service charge, but it's a start, and hopefully every other tenant will follow suit. And once landlords have reduced their rent expectations, there'll be fewer vacant shops.
I tweeted this article, some drone from Conservative head office promptly started wailing on about pension funds etc. They are very efficient, it must be said.


Lola said...

Bollocks pension funds. A 'good' scheme will probably hold about 10% real estate. The balance 'should' be in good quality bonds and equities, the balance depending on the profile of liabilities.

Mark Wadsworth said...

L, I made this point and the drone ignored it. He moved smoothly on to "not all pensioners are millionaires".

Bayard said...

Mark, are you sure "he" wasn't a 'bot?

Mark Wadsworth said...

B, maybe. I doubt it somehow. Each drone gets a checklist, poor widows, pension funds, negative equity, valuations, capital flight etc, they just tweet a couple at random until you block them.

george. said...

There is a problem these companies are trying to ignore the internet age.Retailers are at the sharp end there is no going back.Where are all the harness makers?.

Bayard said...

G, it may come as a surprise to you, but some people actually enjoy going to shops and buying stuff there.

Personally, I think Screwfix has a good model. You can find out whether they have what you want, whether it's in stock and how much it costs on line, then go in an and buy it there and then, instead of having to wait for it to be delivered and paying for the postage/delivery. A lot of retailers could adopt this model. I used to use a hardware/tool shop that operated in this way, but then went internet-only and now have a retail premises again. Quite likely because their original landlord was charging too much rent. Even online retailers need premises. The only reason why they tend not to have those premises on the High St is because the rents are higher on the High St (hence the name?) As we are seeing, the commercial advantage of the High St is being eroded and so we should expect rents to start to fall in comparison to out-of-town premises an internet retailer can operate from. This is more of a problem for landlords than it is for retailers, especially if those retailers have an online presence as well.

L fairfax said...


I am glad that pension funds are afected, I wondered if that were true.
I wonder if any councils will have problems.
(I am not saying lower rent, is a bad thing, I just wondered have any problems).

Mark Wadsworth said...

G, if retailers hate business rates so much whysnd hate internet retailers, why don't they shut down and go online only?

B, yes, I'm also a big fan of Screwfix. The internet/real life interface works well, and on the whole, their staff are knowledgeable and helpful.

LF, replying for L, the point is, pension funds wouldn't really care. They own premises and they own shares in tenant businesses, it all cancels out.