Comment: Smart retailers have nothing to fear from quarterly rent day

We’ve had some sombre news this week as four more retailers headed for administration, putting an estimated 2,000 jobs at risk.

There is always speculation that the quarterly rent system is responsible for an administration but, frankly, this is just a lazy comment and fails to address the fundamentals.

If a company is struggling to pay one quarter’s rent, the problems have most likely existed for a long time before. Quarterly rent is the product of an archaic system and smart retailers have managed to head cash flow issues at the pass by negotiating monthly rental payments instead.

So even though administrations may be great headline grabbers, let’s not lose sight of those retailers that continue to raise their game. Companies like Asos, Zara and Ted Baker are living proof that the secret to running a viable retail business depends on giving consumers what they want, whether that means affordability, flexibility, personalised service – or all of the above.

Earlier this month, Asos posted a 45% increase in quarterly sales and is a company that seems to do everything right. For a start, its fashion range has always been refreshed with extraordinary speed in order to keep up with the latest trends and styles. Not only that but the company has become very adept at selling ‘outfits’ and ‘looks’, rather than a single item of clothing at a time.

The company is also redefining online fulfilment with the launch of 15-minute delivery slots through its ‘Follow My Parcel’ scheme. Customers will be able to track packages in real time and there will be no extra charge for the service. Clearly, this is a company that understands how important the delivery aspects of online retail can be for today’s consumers.

Argos appears to be jumping on this same e-bandwagon, with claims that the online side of its business could account for 75% of sales by 2016. In the meantime, its popular click-and-collect service continues to provide customers with a winning combination of online shopping and physical locations where they can collect orders and, more importantly, receive advice from sales assistants – something that online giants like Amazon and eBay simply can’t offer.

Some high street retailers at the luxury end of the market have also continued to outpace the sluggish economy, often by providing customers with a more exciting shopping experience. Burberry, for example, has blurred the divide between physical and digital by creating a store that is essentially a physical version of its website. The company now features RFID microchips in some items of clothing which, when worn, transform mirrors into screens showing how the clothes look on a catwalk. Likewise, there are no till points in its Regent Street store. Instead, roaming shop staff are on hand to process transactions with iPads and credit card machines.

The lesson to be learnt from all these retailers is simple: get your proposition right and you can trade through tough times. Smart retailers that take this message onboard will find that responsive, consumer-centric strategies will always prevail, regardless of when the rent is due.

Dan Coen, director, Zolfo Cooper