Retailers and the local authorities fight to keep our city centres alive

April 16th, 2009 by admin | Filed under Daily News, Retail.

Although the internet has taken some of the edge of high street shopping scene, as any member of the public will hasten to tell you, patrolling the city centre in search of the latest fashions and sale bargains is as much a part of the British culture as fish and chips. With the credit crunch now at its peak, you would think that the last thing that the UK public would need is more retail outlets. However following the lead of the Conservative government who in the last days of their tenure in 1996 took action to stop UK city and town centres and their high streets from turning into ghost towns, the Labour government may be taking an involuntary lead from them. It seems to be a case of, if these city centre shopping complexes didn’t exist, the government wouldn’t have to do something about them, but their presence is a responsibility and even a liability, meaning that efforts will need to be made, and subsidies handed out to keep these sites becoming eyesores and symbols of urban decay. Retails analysts have predicted that shop vacancy rates could increase to 15 per cent by the end of the year, meaning that close to 140,000 units could be lying vacant by the end of 2009.

There are various ideas being mooted on how to prevent this from happening, some of them original and many foolhardy. One direction that is being investigated is to take empty retail units and convert them, even temporarily, to galleries displaying work of local artists and artisans, or even more obscure, job centers or counseling centres for those who are in financial difficulty.

It wouldn’t take too much imagination to understand that these kind of units would hardly create an atmosphere conducive to successful retailing, and a more realistic approach that is gathering momentum is for the centre owners be given financial incentives by the UK Treasury to allow them much greater flexibility in granting leases, especially in the short term. In turn, local government would endeavor to cut back as much as possible in the time taken to allow planning permission on internal changes.

An interesting breakthrough has come to light in the last few weeks, and could develop to become one of the most viable alternative solutions to the problem.

By taking advantage of a clause of in the Company Voluntary Arrangement (CVA) legislation, an obscure procedure under insolvency law could become a win/win situation for both retailers and centre managers throughout the UK.

Leading the way are JJB Sports the sportswear retailer who are looking to secure a ground-breaking agreement with their landlords, under the protection of the law.

JJB set the ball in motion last month by approaching their landlords with their own variation of a CVA proposal, whilst also stating that it was the only way the company could avoid falling into administration.

Under the terms of the CVA, JJB asked its landlords for permission to pay rent monthly rather than quarterly on its 250 stores in the company that are still trading as well as to reduce rent in another hundred plus units that were closed due to lack of profitability, with high rents being a major factor. Whether these stores will be re-opened if their rents are reduced, or whether JJB are simply trying to reduce their overall overheads is still unclear open.

If JJB succeeds to stay afloat and even reopen some units that are presently lying empty, it will represent a major breakthrough and possibly signal a revival in high street retailing, with other companies bound to follow suit, with the UK public standing to gain from the situation more than anyone else.