Crate & Barrel’s legendary founder says rents and lease structures are a barrier to new entrants

Renowned American homewares retailer Crate & Barrel has hit out at the structure of the UK property market, with legendary founder Gordon Segal warning that he will never open a store here unless landlords become more flexible.

Speaking to Retail Week at this week’s World Retail Congress in Berlin, Segal said the UK is an attractive potential market but, as long as landlords insisted on traditional lease structures, Crate & Barrel would look elsewhere for new opportunities.

Despite property owners’ insistence that they are becoming more flexible and the arrival of international names in this country, Segal’s remarks are a sign that some overseas retailers still see the UK property market as a barrier to entry.

UK retail rents are among the highest in the world and the system of market evidence to set rents means retailers can face big rises at review.

Segal said Crate & Barrel would only do a deal here if it could find a suitably sized store in a leading London location, and only then if he was “getting a rent and a lease where we can make some money, not just the landlord. They might get someone who wants to do it for their ego but I don’t open stores for my ego”.

He said there are “too many places where I can go and make some money instead of going somewhere just to make the landlord rich”, and was particularly critical of the way one deal at a high rent sets a tone for the market that affects everyone else locally when rents are reviewed.

He said: “If it’s a good site it should be a good rent but what I don’t get is if someone goes down the block and pays a crazy rent then that becomes the market rent.”

Another big European retailer with stores worldwide echoed Segal’s concerns. The retailer, who asked not to be identified, said UK rents were simply too high for his business to make money here.

At the Congress, Segal, who co-founded Crate & Barrel with his wife in 1962 and remains chairman, told how the digital age is changing his business.

Crate & Barrel built its reputation on enthusiastic service in stores but Segal was surprised by the way shoppers are now happy to buy home product without inspecting it. l Full WRC report next week.

“Style, structure and values” were singled out by Burberry chief executive Angela Ahrendts as the keys to her success as she won the Outstanding Leadership Award at the Oracle World Retail Awards in Berlin this week.

The judges praised the way she had made the luxury brand relevant in challenging markets.