The Retailer Winter Edition 2022

THE RE TA I L ER

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THEN AND NOW – ESSENTIAL LEARNINGS FROM A GLOBAL PANDEMIC

Ruth Clare Partner Shoosmiths

T he events of early 2020 years on, are we still facing the same challenges? In this article, retail specialists from Shoosmiths lookback at theprevailingpre-pandemic themes impacting the industry, as coveredbyTheRetailer in itsAutumn2019 andWinter2020editions, to evaluate the ‘then and now’. Workforce challenges Employment lawyer, Lauren Bholé, comments: “In late 2019, Brexit was seen as the primary obstacle, with retailers considering howtheUK’s departure from the EUwould impact their work force. LittledidweknowthatCovidwouldprovide the ultimate trump card and prompt a complete makeover of the retail sector. “Fast forward two years and data from retail ana lytics company, Fourth, shows that the biggest issue for retailers (94%) is talent shortages, requir ing retailers to consider tech solutions, hybrid shop floor / back-office roles and applicants fromnon-EU countries (factoring in immigration requirements), as well as longer-term options suchas reviving internshipprogrammes and local university partnerships. “So,withstaffingatmost retailers still nowherenear pre-2020 levels, it is clear that the pandemic has onlycaused to replaceoneobstaclewith another, and that retailerswill nowneed togoeven further in their pursuit of talent.” caused huge disruption to the retail industry, but two

What is a retail lease? Real estate lawyer, Ruth Clare, comments: “The concept of a market position on retail leases in 2021 is hard to nail down. The movement on key lease provisions, particularly length of term, breaks, turnover rents and pandemic suspension clauses, has further muddied the waters since 2019. As with uninsured risks twenty years ago, we hope that a market positionwill emerge over time for pandemic clauses, but the last twoyears have provided few new lettings for guidance. A numberof landlordsandtenantscontinuetoregear to reduce rents and push out break dates, and all are assessing long-term requirements for space. “What ismore,manydeals arebeingdone through sideagreements so the leaseswhichcanbeopenly discussed are not reflective of the actual terms beingagreedbetween the landlordand the tenant. The concessionary positions are documented confidentially to get the deal done and, arguably, protect the landlord’s investment position.These can sometimes be justified due to the nature of the tenant but are these side deals reallywhat is best for the market? Certainly, they achieve the short-term aims of a landlord to secure tenants whowill drive footfall andpayservice charge and business rates liabilities, while assisting tenants to continue their bricks and mortar offering on a cost-effective and flexible basis. However, the absence of genuine evidence of the terms on which space is availablemay not prove helpful in the medium or longer-term.”

Omni-channel v bricks and mortar

Commercial lawyer, Luke Stubbs, comments: “As soonasweentered thefirst lockdown in2020, omni-channelwent frombeingpart ofawidercus tomerexperience totheonlycustomerexperience for certainbrands. Retailerswhohad traditionally reliedonamore“personal” in-storeexperiencehad to change tack quickly, while thosewith existing onlineplatformshadtodealwithchallengesaround stock levels and fulfilment. The future of retail dependedonhowwell businesses could respond to the changed environment, tackling head-on the need for a digital presence, the realisation that (use of) cash is no longer king, newAR and VRshoppingexperiences and theenhancedarray of delivery options. “Two years on from that surreal spring in 2020, in the same way that the nature of office-working has beenchanged forgood, it is brutallyclear that thepandemic has fundamentallyalteredhowwe shop. Things that were once viewed as “nice to have” havequicklybecome industrystandardand, as retailers closelymonitor the returnof shoppers to the high street, uncertainty remains. Wewill have towait and see, but one thing is clear, theomni-channel vbricks andmortardebate that wasmakingheadlines in2019 isnownot aneither/ or question, but a symbiotic necessity.” Ruth Clare adds: “If shorter-term leases are to become the norm for bricks andmortar shops, howwill retailers be able to convince their boards to incur the level of capital expenditure required forahigh-endretail fit out?What incentives will landlords have to offer to achieve rentswhich they can then use to fund reinvigoration of public space and enhancement of the collective customer experience?”

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The absence of genuine evidence of the terms on which space is avail able may not prove helpful in the medium or longer-term.”