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Weak economy gives new momentum to retail rents campaign
22
Jul '08
The British Retail Consortium (BRC) is welcoming the new impetus given to retail rents reform by some of retailing's biggest names.

Arcadia owner Sir Philip Green and Lord Harris, Chairman of Carpetright, are among those now calling for commercial landlords to accept rents monthly rather than quarterly in advance.

The BRC believes its two year campaign has lead to monthly terms becoming the norm on new and re-signed leases. But, for the rest, toughening trading conditions are making the extra costs and cash flow difficulties of paying quarterly in advance more significant.

The BRC estimated the survival of this historic rents practice adds £145 million a year to retailers' costs.

The retailers' organisation is calling on landlords to respond to the economic slowdown by offering flexibility, even on existing leases, where that is what businesses want.

British Retail Consortium Director General Stephen Robertson said: “The BRC has made significant progress in establishing monthly rents as the norm but today's tough trading conditions mean the impact of quarterly leases still out there is that much greater.

“At a time when retailers are battling a range of rising costs in order to keep shop prices and overall inflation down, the new momentum given to rents reform by some of UK retailing's key figures is welcome.

“Requiring rents three months in advance is at odds with standard business practice. It's a historic and costly practice, rooted in the days when communications were governed by the speed of a horse.

“So far this year a number of retailers have gone into administration. Seeing retailers driven to the wall is on no-one's interest. By agreeing to a fairer rents regime, landlords will be contributing to the retail prosperity on which they themselves depend.”

The BRC's case to landlords is:
• Asking for rent three months in advance is at odds with standard business practice.
• Landlords are adding £145 million a year to the costs of retailers who are also struggling with sharply rising commodity and energy costs.
• It is in landlords' own best interests to see a thriving retail sector. They lose too when retailers are driven out of business by excessive costs.
• Landlords cannot argue they are running a credit risk requiring up-front payment when they are dealing with substantial, reputable businesses.
• Monthly payment would significantly ease cash-flow pressures, especially for hard-pressed smaller retailers.

British Retail Consortium


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