The Retailer Winter edition_2020

retail disruption and innovation

Advising Retail: Are Your Professional Consultants Future Ready?

GRAEME BRADSHAW PARTNER AND HEAD OF RETAIL Burness Paull LLP

RETAIL IS DEEP INTO AN UNPRECEDENTED PERIOD OF CHANGE. BUT, WHERE DOES THAT LEAVE ITS PROFESSIONAL ADVISERS?

Mixed uses Retail locations increasingly need to address the needs of a shifting audience across the span of 24 hours. Can retail space adapt to serve commuters, residents, office workers and leisure seekers across the course of a day? There is also a need for bricks and mortar retail locations to be flexible and adaptable for the longer term. That can mean having alternative uses in mind from the very start. Mixing up uses can mean that planning consents become crucial. In retail parks, for example, planning officers need to balance the desire for fresh development against the need to preserve town centres. That can lead to planning consents being granted subject to conditions that tightly control the uses to which retail park units can be put. Complications ensue for retail occupiers and their landlords. Having specialist planning consultants, property agents and lawyers engaged to steer you through the mine field of comparison goods, convenience goods and planning agreements can be invaluable. Sustainability The essential green agenda. It dominates customer thinking and retail leaders predict that this will continue to be a central concern in 2020. Reducing packaging, improving recycling and being part of the circular economy is all part of the action plan. But customers need to see it to be believe it. Retail design teams therefore need to consider how to accommodate ‘sustainability’ and make it visible within a store fit out. A simple example might be the coffee chains that now provide extensive recycling receptacles and prominent discount messaging for those with re-usable cups. While press releases announcing a retailer’s latest commitment to removing plastic packaging generates immediate goodwill, an embarrassing weak link in the supply chain could undo all of that. Think of the horse meat scandal at the beginning of the last decade. Retailers need to hold suppliers and business partners to similar green standards. Your advisers can assist with the contracts needed to underpin such arrangements and help mitigate the fallout if something should go wrong.

Are those who seek to advise the sector able to keep up and add value? It is a relevant concern. As a lawyer, I have acted on a raft of new retail schemes across Scotland in recent years. I have had the privilege of hearing first-hand the challenges and experiences of BRC members, and heard the debates at the key retail conferences. In what follows, I will consider some of the key concerns and changes in retail over recent years and where professional advisers should look to provide the support, guidance and specialist knowledge that their retail clients really need as they navigate the current landscape. Retail resilience Commercial terms agreed on retail space at the outset can have long lasting implications. The heavy burden that property obligations create for retail businesses is only too apparent when looking at the numerous CVA cases over recent years. Powerful retailers have not been slow to take the initiative and demand that there is a fresh balance struck when negotiating lease terms. For many years food court operators and tenants in retail outlet malls have been accustomed to rents that feature a turnover element. These provide for a base rent that is topped up by rent calculated on turnover achieved at the unit in question. Linking rent payable to the performance of a store appears attractive (although turnover and profit do not necessarily align). Some of the larger retailers are taking this principle and making it central to their leasing strategy. Contractual provisions determining the rent to be paid are therefore becoming ever more complex. Hence an experienced specialist adviser is a necessity.

70 | winter 2020 | the retailer