Saturday, May 19, 2012

Can The Retail Industry Stage A Recession Recovery?

What Is The Problem?

The problems enveloping the retail industry are in many ways symptomatic of the issues faced by the wider economy, both throughout the United Kingdom and indeed across the globe. There is a total lack of confidence from consumers in terms of spending at the moment, and this is being most acutely felt by the retail industry. As belts and purse strings are tightened even further, many stores are being pushed to the limits of their ability to continue to trade.


Many of the issues which are faced by businesses today actually stretch as far back as the beginning of the previous decade. The early 2000’s saw a dramatic rise in the number of commercial properties for rent for a number of reasons. The first major factor was a number of up and coming retailers looking to gain UK market share, thus agree to pay vastly inflated rents so they won contracts and were able to establish themselves on the high street. Unfortunately this then manifested itself in either high prices to cover their overheads, or savage reductions which completely took away the profitability of the business, and thus their credibility in the eyes of both customers and creditors.
As a knock on effect from this, landlords felt empowered now to charge similarly high rates as contracts became renewed, not worrying at the time about the prospect of being left with empty commercial property for rent. Times were good then, and landlords were virtually assured of always having someone who would come in and pay their rates, no matter how prohibitive they may have seemed initially.

Further Industry Damage

It must be noted that it is only truly the physical retail industry on the high street which has taken a sustained battering. With stubborn landlords not willing to renegotiate rents, tenants are either having to leave the premises by refusing to renew or unfortunately when the company ultimately folds.
Coupled with a continued strong performance from the supermarkets and the continuing growth of online sales, the outlook remains bleak for the retail trade, at least the physical aspect we are used to seeing on the high street. While the double dip could ultimately spell the end for large chain stores taking up hundreds of tenancy agreements on decade long leases, an eventual softening of landlord attitudes could open the door for small businesses and independent stores to breathe new life into the struggling UK high street scene.
Harworth Estates are one of the leading land owners in the UK, and have a vast amount of commercial property for rent in the UK.

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