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Gloucestershire Business News

High street crisis - what about the landlords?

With confirmation this week that New Look is to close 60 stores and will seek reduced rents on its remaining shops, it's not just the retailers that are in financial trouble. New Look is looking to reduce rents in its remaining 393 stores by between 15 and 55 per cent, hitting landlords hard.

The landlords are between a rock and a hard place. Nobody wants to see their income cut so dramatically, but with so many high street stores suffering, who else is going to move in and take their shop units? The reality is they have little choice but to accept the lower rents from New Look and all of the other struggling retailers because it's better than an empty unit and no income at all.

In the last few weeks we've seen Maplin, Toys R Us and Countrywide Farmers  go into administration, while B&Q , Moss Bros , Carpetright and Claire's  have reported falling profits or are looking into ways to save their business. For some, this includes following in New Look's footsteps and going for a company voluntary agreement (CVA) and negotiating lower rents. Every one of these negotiations is going to have a negative effect on a high street landlord.

Sadly, retail isn't a level playing field right now, with the likes of Amazon not having the same overheads as companies like New Look and Moss Bros, meaning they can offer a big range of products at highly competitive prices.

This has all been exacerbated by the recent bad weather. If there's snow or rain falling, shopping from the comfort of your home feels a lot more pleasant than braving the elements to go to the high street. This was confirmed anecdotally, with Royal Mail struggling to cope with the sheer number of parcels at the sorting office in Bristol following the snow.

And it's not just the shops which are looking to reduce their rents. Over the last few months, a number of well-known restaurant chains have announced closures and falling profits, including Bella Italia, Cafe Rouge, Prezzo, Chimichanga , Carluccio's, TGI Friday's, Frankie and Benny's, Chiquito and Jamie's Italian.

Figures from finance firm Begbies Traynor, which monitors the financial health of UK companies, has revealed that the number of restaurants experiencing 'significant' financial distress rose to 11,091 in March, an eight per cent increase on a year ago.

Restaurants are facing rising labour costs and fierce competition, combined with cautious consumer spending. Or maybe they just aren't offering the customers what they want any more and it's all getting a bit old hat? But, as they close branches or cut rents, the landlords are again taking the brunt.

We've said it before and we're not embarrassed to say it again. If you value your high street stores and your local restaurants, get out there and use them before it's too late. You're not just supporting the retailer, you're supporting the landlords too.

What do you think? Email mark@moosemarketingandpr.co.uk  

Picture Credit: Helen Iwanczuk

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