High street ‘crisis’ set to open doors for independent operators
Do the mass closures on the high street – New Look, Jamie’s Italian, Prezzo, Byron - indicate a tipping point for retailers on landlords rents? Operators certainly hope so. Coffee Business World’s editor Kate Oppenheim reports.
As big high street names announce store closures, independent operators are hoping that a “new world order” is around the corner, one where rents will be more realistic and fledging businesses have a better chance of survival.
Doug Williamson, founder of Esquires Coffee, which has 52 sites in England and Wales and is embarking on regional expansion this year and next, told Coffee Business World: “Institutional landlords have lost their way and forgotten retailers are their customers. They have made money when they can and driven even the big brands out of business, while ensuring the little guys can’t survive.
“I think these days are now over for the landlords. It’s time for a new world order in terms of real estate in the UK. We’re fed up with having the s**t kicked out of us, what with the living wage, pensions, Brexit. It’s like sitting on a four-legged chair and with one leg kicked out from under you. When these companies vacate their sites, it will be a renters markets, otherwise there’ll be empty properties everywhere.”
Adrian Campbell-Howard, founder and MD of Society Café with outlets in Bath, Bristol and Oxford, agreed, saying: “It’s logical that with all the closures landlords will have to drop their rents to make it appealing to the independents.”
He continued: “For the last couple of years we’ve been watching what has been happening on the high street. We have a site in Oxford, where the building of the Westgate Shopping Centre has been underway, so we’ve been preparing ourselves for the high street dying as big chains head off into the swanky new centre. But we hope this will present us with an opportunity, as the landlords will have to reduce rents and the council its business rates, etc, which could all lead to a more interesting high street where an independent haberdashery sits next to a small grocer.”
Café Society is currently looking for new sites in Exeter, Cardiff, Bristol along with another two or three premises in Oxford.
Alan Tomlins co-founder and head of coffee at Small Batch Coffee, which is looking to find new locations out of its Brighton heartland, said as an independent he tended to look away from the high street in neighbourhood locations to avoid high rents, which had got “out of control”.
“It’s a chicken and egg situation. High street rents are making it unaffordable for the independents, which I’m sure shoppers would actually like to see more of. It has certainly become harder and harder to find sites than it was three, four and five years ago, purely because there’s more competition out there for any good sites.”
Craig Bunting at BEAR commented that while it was sad to see people losing their jobs within the closing businesses, the situation served as an eye-opener for bigger operators, like Jamie’s Italian, in that they could no longer afford to pay ‘anything’ to have the best location. “We all need to make sure that the operation is viable – and more realistic rents from the landlords is a key part of that.”
Bunting added that BEAR was hoping to move into a former HSBC bank site, which had been vacant for five years in Stone, a market town in Staffordshire. “HSBC has five years left to run on the lease, so we’ve made it an offer.” Finding opportunities like this were key, he continued, but took a lot of time to find. BEAR’s three-strong management team spent a combined average of two days a week looking at, and negotiating on, possible new sites.
Esquire’s Williamson pointed to the recent success of retail ‘box parks’, where shipping containers were being used as retail space as signs that a resurrection of the independent business model was around the corner. “These spaces are being used by fledging businesses with cheap rent being at their core. It allows them to build a name for themselves. The fact that so many of these are popping up all over indicates to me a movement back to the independent model. It has all been driven by rents.”
In a recent report, BBC News’ business reporter Daniel Thomas sited six reasons behind the high street crisis:
- Squeezed incomes: a 15% fall in the pound since Brexit has pushed inflation over 3%, making imported goods more expensive, while wages have been rising at a slower pace and shoppers have less disposable income to spend.
- The shift to online shopping, with Amazon having a huge impact on the high street as more consumers buying cheaper and easier online.
- Changing tastes: people want a better retail experience.
- Rising overheads: the National Minimum Wage and the new National Living Wage is pushing up payroll costs. Business rates are due to raise again in April.
- Too many shops: retailers cannot afford to have underperforming shops.
- Too much debt – a consequence of over-expansion.
Esquires' Doug Williamson, Society Cafe's Adrian Campbell-Howard, Small Batch Coffee's Alan Tomlins and BEAR's Craig Bunting are all members of the European Coffee Expo's Steering Panel. European Coffee Expo is held at London's Olympia May 22-23. Register here.