You don’t have to be the chief executive of a retailer to know there has been a fundamental shift in the retail property market.
Just walk through any shopping centre or high street. The seismic change in the way people shop, with an ever-increasing proportion of sales shifting to online, has been compounded by consumer uncertainty as the Brexit process drags on.
Certainly, the past 12 months have been the toughest I can remember in my 38 years in the retail business. It’s been really difficult out there, and if I’m totally honest, we’ve not always helped ourselves at Ann Summers with a few own goals.
“Perversely, retailers that have been through CVAs are getting better deals than those that have been good tenants and paid their rent”
The good news is we’ve brought in some amazing talent – almost an entirely new senior management team – and I’m confident we are on our way back after this difficult year.
It has been widely reported that even the most successful retailers, such as Next and Primark, are now approaching their landlords asking that they adjust their rental demands to reflect these new market conditions. And we have been doing the same. Ann Summers has just over 100 stores around the UK at the heart of high streets and shopping centres up and down the country, and we are widely recognised by landlords as a responsible retailer offering something distinctive as part of their tenant mix.
I have been heartened by most of the conversations we’ve had with our landlords. The vast majority of them live in the real world and understand that circumstances have changed. They know that in the multichannel world, if stores are going to make money in the future, the cost of occupying them has changed.
It helps that they know we are a business that can be trusted with values and integrity. It also helps that our family ownership has meant we have been able to inject a significant sum to help the business through this difficult period.
Looking for fairness
These constructive and open discussions mean our customers, colleagues and suppliers can be sure that almost all Ann Summers stores will continue to trade for many years to come.
They make it even more disappointing that a small handful of landlords – including one or two of the biggest names in the industry – continue to bury their heads in the sand and pretend historic rental levels are sustainable in future.
“We cannot allow the future success of our business to be jeopardised by the handful of landlords who won’t come to the table”
Their argument does not hold water. It is irrefutable that rental levels in shopping centres and high streets have declined. It is also the case that, perversely, retailers that have been through CVAs are getting better deals than those that have been good tenants and paid their rent.
Don’t just ask me, ask Lord Wolfson, Paul Marchant and the other heads of some of the most successful retail businesses if that’s fair.
I continue to hope that the remaining landlords will come to the table and agree to sensible new terms that mean our stores can continue to trade. We are certainly not asking for zero-rent deals like some retailers have – we want to agree on terms that allow us to continue our partnerships with these landlords for many years to come.
The irony is that if those talks fail, we’d have to consider our alternatives. Let me be clear: we are 100% focused on finalising consensual agreements. If, however, we have to take stronger action, the landlords of the 95%-plus of our stores where we have good terms, including all those that have supported us with new improved deals, would not be affected. We would be mad though, not to consider all options – including a CVA of that 5% of stores – because we cannot allow the future success of our business to be jeopardised by the handful of landlords who won’t come to the table.
I am a firm believer in the future of bricks-and-mortar retail as part of a complete multichannel proposition. I also believe working in partnership with landlords that deliver top-class retail destinations is vital in tempting customers to visit our stores.
But landlords have to understand the world has changed. If they acknowledge this and make good decisions, we can all be successful in this transformed market. If they don’t, we all lose out.
Ann Summers wins rent deals but CVA on cards for remainder
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