Industry news

Landlords challenge retailers to a more transparent future

The move towards data-driven intelligence has been one of the biggest changes in business culture in recent years. Yet, there is still one area in which it remains lacking – and that is the exchange of data between retailers and their landlords, according to a recent report in The Times.

Although there is a well worn narrative that the burden of business rates, rising rents, the march of online retailing and landlords’ inflexibility are to blame for the retail industry’s woes, there is a counter argument that retailers need to share more if they really want a more collaborative future.

The disconnect between landlords and retailers is the legacy of outdated lease structures that have traditionally encouraged a passive asset management culture.  Many of the more progressive landlords such as @BritishLand are adapting but, across the board, the UK still lags some way behind countries such as the USA, France and Italy, which tend to offer shorter leases that are at least partly aligned to turnover.  In most cases, this translates into a healthier and more transparent relationship between landlord and retailer.

However, landlords cannot effect industry-wide change alone and – in order to offer more flexible options – need to understand retailers’ businesses in more detail.  If retailers truly want their landlords to be more like business partners then they need to start sharing more of their trading data.

As it stands, landlords have little choice but to rely on either rating agencies or personal relationships when it comes to understanding retailers’ performance.  As Lawrence Hutchings, CEO of Capital & Regional, put it: “The transparency around how retailers are performing is getting worse.”

The only way for physical retail to meet the challenge of online retail is to respond with an experience and environment that sets it apart.  This challenge applies equally to both landlords and retailers and those who get it right will need to do it in close collaboration with one another.  We stand at the cusp of an opportunity to redefine the relationship between landlord and tenant and to shape the future of retailing.

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