Long-term ‘friend’ of this column Mike Ashley, owner of Frasers Group and Sports Direct, has been making a name for himself again this week. Sadly, the name he has been making is unprintable in a Blog associated with toys (although it rhymes with Nat). This time, he has written to all his landlords to kindly inform them that he won’t be paying any rent on his stores until trading “reaches a level that was expected when agreeing rental terms.” So much for ‘we’re all in this together’ and sharing the burden – if he had been a passenger on The Titanic, we all know how he would have approached the lifeboat situation. To be fair, I suspect that the majority of retailers are not currently trading at traditional levels, but I’m not sure it is ethical (or even legal) to completely withhold payment from service providers. Most of us accept that we have to take our share of the pain in the current climate, except apparently Mr Ashley. And the fact that his letter has somehow gone public will surely make other tenants feel they are entitled to make exactly the same request. If every retailer does that, the house of cards is likely to come tumbling down rather quickly.
Intriguingly, Mr Ashley’s letter also asks for payments to be made monthly, rather than quarterly – although as he has declared he won’t be paying any rent at all, I am not sure why that would make a difference. ‘I’m not paying rent this month’ and ‘I’m not paying rent this quarter’ sound pretty much the same to me. I know it’s not like Mr Ashley to be unreasonable, but it just seems to me that he has a rather unique definition of the word ‘partnership’. As I have said before, everyone will be judged on how they behave during this time. I know how certain toy retailers are approaching the same landlord/tenant negotiations, and without giving away confidential commercial information, let’s just say the approaches are absolutely chalk and cheese.
Mike Ashley is not the only retailer making headlines this week: John Lewis has confirmed that eight of its stores will be closing – four ‘at home’ branches, two travel outlets (Heathrow & St Pancras) and two major stores in Birmingham and Watford. The closure of the ill-advised ‘at home’ branches is completely understandable, but poor Watford; my hometown has already lost the new Debenhams flagship branch and now John Lewis, which has been the fulcrum of that shopping centre for the past 30 years. Incredibly, John Lewis didn’t even wait to see if its sales rebounded after the closure of Debenhams. A letter from a John Lewis director to suppliers told how the eight stores had been ‘identified as financially challenged prior to the pandemic’, but maybe the disappearance of its biggest local competitor would have helped turn that round? As for Birmingham, it has been suggested in some quarters that John Lewis made a blunder in choosing the Grand Central location, rather than the Bull Ring, in the first place.
Despite these developments, I am hearing that shopping centres are seeing improving footfall, now that more stores, restaurants and public toilets are all now properly open. Let’s hope that trend continues.
Inevitably, retail is not the only area grappling with new post-pandemic realities. In news which will come as a surprise to precisely no-one, a string of trade shows and events have regrettably been forced to admit defeat and announce that they won’t be going ahead. London Comic-Con, Cologne’s Kind & Jugend and the rescheduled Toymaster show have all had to wave the white flag of surrender this week. Kind & Jugend was a particularly interesting example: over in Germany, trade shows have been placed in a different category to general mass gatherings, unlike the UK, where everything is currently lumped in together. What this means in practice is that the current government guidance would have to change for a trade show to be able to take place here in the UK. Talking to someone who modern media parlance would describe as a ‘person familiar with the matter,’ he suggested that for the current rule to be relaxed, we would have to hit the equivalent of number 2 on the ‘Nando’s scale’ of virus transmission– essentially, we need to get to Lemon & Herb, while we are probably still somewhere between hot and medium. Whereas in Germany, trade shows can now legally take place, naturally with all appropriate safety measures in place. And yet, despite this, Kind & Jugend was still cancelled; this infers that whether a show can legally take place in not only factor in play – visitor and exhibitor sentiment play a key role in the final decision. And one would have to assume that the cancellation suggests that many people still feel slightly uneasy about the prospect of visiting a trade show right now.
There is also the question of whether a trade show organiser would be happy to go ahead with a compromised event that doesn’t live up to its usual standards, and indeed whether it would even be economically viable to do so, especially if the appetite from visitors is in question. Would exhibitors feel comfortable making the traditional level of investment without being confident of footfall reaching expected numbers (and we’re back to good old Mike Ashley…)? To take the analogy a step further, I doubt that exhibition venue owners would exactly be falling over themselves to reduce rental costs.
Now, of course, second season / spring summer toy buying shows are markedly different to main season/ autumn winter events (i.e. those toy fairs held in Q1): second season events are generally viewed as ‘nice to have’, whereas main season events have hitherto been deemed pretty much essential. When lockdown started, many in the toy community remarked how fortunate we were with the timing: the trade shows were all behind us and it was not a traditional peak retail sales period for toys. At that stage, most people were working on the perfectly reasonable assumption that this would all be over by late summer or the autumn. Over time, it became clear just how optimistic that timeline was. Now, all eyes are on the festive selling season and Q1 2021, in the hope that measures being taken now can get the situation sufficiently under control to enable retailers to enjoy a good Christmas and all the trade shows to take place in January and February. Let us hope that aspiration doesn’t prove over-optimistic too…