Research: 25 retailers talk property strategy and need for rates reform
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The leaders of 25 UK retailers including Primark, B&M, Iceland, Frasers Group, ScS and The Original Factory Shop have spoken to Retail Week for a far-reaching report into the state of UK retail property and the need for reform.
The groundbreaking report confirms business rates are the biggest challenge facing retail businesses as they emerge from the grips of the pandemic, accounting for an average of 51% of rents
Retail Week spoke to 27 retail leaders across 25 UK retailers for Rents, rates, reform, produced in association with Addleshaw Goddard, Bruntwood, and FRP Advisory.
We have published this major report, based on in-depth interviews with these leaders conducted from December 2021 to February 2022, together with our partners to uncover the challenges and opportunities driving property strategy discussions between retailers, landlords, agents and local and national governments.
So, what did the retailers say?
The business rates system is ‘broken’
The retailers we spoke to agreed that the business rates system is "broken" and in desperate need of reform.
“The system is prohibitive to some of the acquisitions that we would like to make and I imagine if you were a smaller start-up business, it’s even more worrying”
“There needs to be a whole levelling of the playing field and if there isn’t, there’ll be this inevitable slow death of the high street as online takes over”
“In some locations, typically larger stores, and particularly ones that have been negotiated more recently, you’ll end up with the rates bills being higher than the rent bill”
“You need an online sales tax because traditional bricks-and-mortar retailers that serve a huge community purpose are subsidising Amazon”
For more on what the 25 retailers we spoke to think about the UK’s business rates system, download your free copy of the report.
Beth Emmens
Beth Emmens
Richard Walker
Richard Walker
Will Crumbie
Will Crumbie
Simon Arora
Simon Arora
Nicolas Barnoin
Nicolas Barnoin
Paul Kraftman
Paul Kraftman
Richard Walker
Richard Walker
Mark Saunders
Mark Saunders
Retailers are working well with landlords
In contrast to the challenges retailers are facing over business rates, the majority (56%) said they are "working well" with landlords, who many said have approached rents discussions productively during the pandemic.
This was compared to 36% that said discussions with landlords were a mix of "working well and contentious’" and just 8% that said negotiations have been "contentious".
“Are rent discussions easier at the moment? Yes – everybody wants to make deals, there are plenty of vacant properties”
“Almost every landlord has been really good, really supportive, wanting to talk”
“We can push for ever-shorter leases, but if there’s no certainty of cash flow for the landlord, they can’t get the funding, they can’t invest. I pity the poor landlord because it’s not like it was with 25-year institutional leases and it does make it harder, of course”
“That landlord-retailer relationship is traditionally viewed as adversarial; in reality, you’re in a partnership, so you’ve both got to make money.”
For more on what the 25 retailers we spoke to said about rents and their discussions with landlords, download your free copy of the report.
Stores’ crucial role in future retail ecosystems
This report conclusively finds stores continue to defy predictions of their demise and remain central to retailers' plans going forward.
Over a quarter (28%) of the retailers we spoke to plan to open more stores within three years, while 44% plan to maintain their current level.
The focus, instead, is on further multichannel integration so that stores become an extension of online and vice-versa.
“Our digital reach creates an efficiency for our physical estate – 66% of sales are generated via digital channels, but 98% of fulfilment of those sales touch the store''
“We’re investing in digital but not at the expense of the store portfolio – I actually see us extending the store portfolio. Both are super important in today’s day and age, so we’re focusing on both and for me, it’s about how we really join up that customer journey”
“Bricks-and-mortar for us this year has performed better than expected simply because people just wanted to have that physical experience and they were happy to speak to a store associate. Online will never completely replace the in-store experience because [it doesn’t allow customers to] smell a fragrance”
“The value of a store is a marketing piece as much as it’s transactional. It’s that shop window demonstrating the brands and breadth of products we have. We don’t necessarily measure it on things like customer traffic. It’s trying to get our basket spend up, remain profitable, and be a successful retailer in each of those locations”
For more on what the 25 retailers we spoke to said about their future store strategy, download your free copy of the report.
David Wood
David Wood
Steve Carson
Steve Carson
Alia Hawa
Alia Hawa
James France
James France
Who did we speak to?
These findings are just the tip of the iceberg from our unprecedented research into the views of retail boardrooms across the country and insight into the discussions happening with landlords right now.
See the full list of on-the-record contributors to this report below and download your free copy of this report today to find out what they had to say.
- Anda Rowland, director, Anderson & Sheppard
- Dawood Pervez, managing director, Bestway Wholesale
- Simon Arora, chief executive, B&M
- Nicolas Barnoin, chief operating officer, Byron
- Tom Beahon, co-founder, Castore
- Will Crumbie, chief executive, Fat Face
- James France, head of property, Frasers Group
- Brett Parker, property director, Gail’s
- Paul Kraftman, chief executive, Gift Universe and Menkind
- Richard Walker, managing director, Iceland
- Darren Abbott, financial director, Joe Browns
- Beth Emens, head of acquisitions, Leon
- Alia Hawa, managing director UK and Ireland, L'Occitane
- Mark Saunders, chief executive, Mamas & Papas
- Graham Harrison, group property director, Pets at Home
- Mike Spencer, chief business development officer, Pizza Hut
- Tom Meager, group director of property, Primark
- Caroline Crosswell, chief retail and development officer, Rapha
- Marie Liston, corporate services director, ScS
- Steve Carson, chief executive, ScS
- Marcel Bordon, chief executive, Soletrader
- Dan Browne, head of property, Ted Baker
- Rachel Osborne, chief executive, Ted Baker
- Kam Birk, property director, The Fragrance Shop
- Ian Williams, chief finance officer, The Original Factory Shop
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