The results of Britain’s biggest retailer Tesco were announced yesterday, revealing the shopping giant suffered its worst Christmas performance in decades. The continued squeeze on household budgets have damaged household names such as Thorntons, Halfords and Mothercare, but the slip of Tesco’s trading results caused eyebrows to raise even further skywards with many an analyst. Given their share of the market, there are serious concerns that Tesco’s dip signals the beginning of a new batch of high street casualties (both HMV and Game issued disappointing results in the new year) with questions about whether consumers are turning away from mainstream retailers.
Certainly, the debate surrounding the future of the high street is likely to intensify in the coming months with the Government set to announce its response to the recommendations put forward by Mary Portas in December. Portas identified the high street model as being “outdated’ and called for free or affordable car parking in town centres to lure customers. She further highlighted the need for a “national market day’ geared towards promoting indoor and outdoor markets with a relaxation of the licensing laws to enable vendors to set stalls up with less regulatory requirements. Portas’ calls to offer incentives for local businesses to trade on the high street would increase footfall for all those remaining on the high
street.
Whilst the focus of Portas’ report was on regenerating the high street, the mixed fortunes of other familiar names, such as Argos and Currys, who often frequent out of town retail complexes, suggest that consumers are holding back overall as opposed to cherry-picking their shopping environment. Whilst there will always be those who buck the trend, Debenhams and House of Fraser have announced increases in their Christmas trading figures, along with the continuing rise of online retail websites such as Amazon, the overall picture is very fragile. With vacant units in some towns running at between a quarter and a third of all stores, it will be intriguing to watch the Government’s response.
Clearly, there is a need for incentives to be offered to local businesses to trade on the high street, to aim towards making the high street the hub of our towns and cities once more; the resulting increase in footfall also benefiting other retailers who have managed to remain on the high street to date. Any proposals or incentives which breathe new life into the high street will surely be welcomed by both Landlords and Tenants alike, however it would be extremely optimistic to expect the first half of 2012 to pass without further high street casualties.
Farleys can offer both Landlords and Tenants valuable advice regarding their rights and obligations or could provide expert guidance in relation to flexible lease terms. For advice or more information, contact one of our commercial property solicitors.