What now for retail?

The retail industry has been among those hardest hit by the coronavirus pandemic. With all non-essential shops forced to close their doors, consumers have been able to adapt their shopping habits by ordering online. But for retailers, it hasn’t been so easy. For many, lockdown has been catastrophic, with retail sales falling by a record 18.1% in April alone[1].

However, it looks like a cautious return to normality is now underway in other European countries. In Italy and Germany, footfall mid-June stood at 70% and 80% of last year’s numbers, respectively. Meanwhile, a UK survey revealed that 40% of people have missed going shopping, while 57% have missed socialising with friends[2]. Clearly, the demand is still there.

But what now for retail? How has it coped during lockdown and what can we expect from the next few months as stores reopen their doors? And what does the future hold for landlords and tenants?

Tenants protected…
Retail businesses have had access to a wide range of government support measures during lockdown. Retail was one of the three industries eligible for business rates relief on commercial premises during the 2020-21 tax year; they have also benefited from the Coronavirus Job Retention and Business Interruption Loan Schemes, which have assisted businesses without cash flow to continue paying vital outgoings such as rent and staff salaries.

In March, the government also intervened to prevent commercial landlords from terminating leases and evicting tenants until 30 June 2020. In April, it also imposed a temporary moratorium on landlords using debt recovery tactics, such as statutory demands and winding up petitions, to recover unpaid rent – also until 30 June.

…landlords frustrated
This has placed a huge strain on retail landlords, who collected less than half the rent due to them in March, with a further decline expected on the next quarterly rent day of 24 June[3]. While most landlords have been doing what they can to help tenants during lockdown, some believe that their tenants – mostly larger chains and companies which have remained open – can still afford their rent, but are using the coronavirus crisis as an excuse not to, causing anger and tension to rise.

The fight for survival
Non-essential stores have been able to reopen since 15 June if it is safe to do so, and the British Retail Consortium has stated that a successful reopening is crucial to many stores’ survival[4]. It is therefore vital that they first regain the trust of their customers by implementing robust safety measures, including the provision of PPE and queueing systems.

The COVID-19 crisis has also forced retailers to slow down and take stock. While the high street has been in crisis for many years now, lockdown may have provided a true impetus for change. In a recent article, Savills said: “[lockdown] has given stakeholders the chance to pause and reflect on a number of issues that have historically plagued the high street.” The property agency suggested that now could be the right time think about what works and what doesn’t on our high streets, and reconsider how our planning and development systems could be harnessed to create modern spaces that people want, rather than need[5].

Landlords and tenants: a more collaborative future?
For many landlords and tenants, a collaborative approach has been key to survival. Tenants have welcomed offers of rent deferrals and other measures, which in turn have allowed landlords to retain as many tenants as possible throughout the crisis. Going forwards, landlord-tenant relations will become ever more important, although an increased number of disputes is to be expected once the ban on evictions and rent recovery comes to an end.

To prevent disputes from escalating, it is always advisable to seek professional legal advice to help both parties come to a mutually satisfactory agreement. To get in touch with a memeber of the team email commercialpropertydept@woodfines.co.uk

[1] https://www.drapersonline.com/news/store-survival-rests-on-successful-reopening-says-brc/7040496.article
[2]https://www.savills.co.uk/blog/article/301126/commercial-property/retail-is-re-opening-but-will-consumers-return-to-the-shops-.aspx
[3]https://www.bbc.co.uk/news/business-52772948
[4]https://www.drapersonline.com/news/store-survival-rests-on-successful-reopening-says-brc/7040496.article
[5]https://www.savills.co.uk/blog/article/300960/commercial-property/our-high-streets-must-be-given-the-chance-to-reset–restart-and-recover-post-lockdown.aspx