October 2011 Archives

The brewing row between the owners and tenants of the Burlington Arcade on Piccadilly, W1, has a distinct sense of déjà vu about it.

More than 34,000 people backed a petition in January 2010 calling for action after 150 traders were ejected from Portobello Market, W11, in favour of an All Saints store.

They argued that the changes to Lipka's Arcade, undertaken by landlord Warren Todd, threatened the character of one of the capital's top tourist attractions and accused him of jeopardising the market in pursuit of high rents.

Fast forward more than a year and a half, and the same argument is now being thrashed out under the arches of the Grade II-listed arcade in Piccadilly.

Meyer Bergman and Thor Equities, the owners of the Burlington Arcade, are threatening to replace boutique retailers, some of whom have traded there for more than 50 years, with glitzy brands such as Jimmy Choo. They have also hired New York-based retail guru Peter Marino, famed for his black leather cap and sunglasses combo, to head up a reported £2.5m makeover of the arcade.

Daniel Bexfield, who has run a silver shop in the Burlington Arcade for 13 years, has branded the joint venture's plans for the arcade as "Dubai style" and Susanna Lovis, a specialist in Victorian and Edwardian jewellery, warns that it risks being turned into another Westfield mall.

As the mood at the arcade becomes increasingly sour and Bexfield's protest gathers momentum - film director Michael Winner recently waded in - it's hard to see an easy and peaceful solution to this familiar dispute.

The retail property sector is set for another bruising as the Office for National Statistics' confirmed this morning that the retail prices index rose to 5.6% in September - the highest annual inflation rate for over 20 years.

The BRC estimates that the new RPI figure threatens to land the retail sector with a £350m business rates increase next April since the uniform business rate is set taking into account the RPI inflation rate at September 2011.

This of course comes at a time when retailers are already grappling with an increase in VAT, low bank lending levels and fragile consumer confidence.

BCSC has been quick to pounce, warning that high levels of business rates will impact retailers' expansion plans. It will in turn also affect the viability of retail development, which is dependent on securing retailers and acceptable levels of rental income.

BCSC, in its letter to local government minister Bob Neill today, writes: "As occupiers' business rates liability continues to increase, a greater share of occupancy costs will be absorbed by rates, eroding potential rental values and therefore the viability of proposed developments."

It is evidently time for the government to start paying closer attention to its independent review of the UK high street, led by sharp-tongued retail guru Mary Portas, which is identifying the level of business rates as a thorn in the retail property sector's side.

Interesting news this morning that Sainsbury's has acquired online entertainment company Global Media Vault for £1m. It is a very clear sign of the supermarket's ambitions to embrace the booming online market. And rightly so if the statistics are anything to go by. The UK entertainment market is currently worth £7.3bn and the online market is expected to double in value by 2015.

Sainsbury's acquisition follows the launch of Sainsbury's Entertainment website last November. GMV's digital database already includes over three million music, film and game assets for the UK market, all of which can be browsed, purchased and distributed via web, mobile, TV and kiosk applications.

A raft of retailers provided a snapshot of the current fragile retail economy in their trading updates last week and it wasn't especially comforting.

Supermarket giant Tesco revealed a 0.5% fall in first-half like-for-like sales - excluding VAT and petrol - in the UK. Its rival Sainsbury's posted a 1.9% rise in like-for-like sales, which excluded petrol but not VAT, for the first six months of the financial year.

Elsewhere on the high street, Thorntons' like-for-like sales dropped 7.8% in the 14 weeks to 1 October and homewares retailer Dunelm saw its like-for-like sales growth fall 2% over almost the same period. Mothercare too reported a like-for-like slump of 9.6% over 12 weeks with a notable drop in the past four weeks.

However, despite the gloomy sales figures, the retail sector has not been hit by any significant administrations following the September rent quarter day. With some respite on the insolvency front, preparations are now firmly under way for what is hoped to be a boost in sales activity for retailers in the run up to Christmas.

It is also worth flagging up the recent Indian summer experienced in the UK recently, which had mixed results on footfall. According to Springboard's National High Street Index, which monitors over 85 UK towns and cities, footfall on the first Saturday of October, when the heatwave hit, dropped 7.1% year-on-year. Conversely, footfall surged on Sunday by 11.7%.

Diane Wehrle, research director at Springboard, said: "The last week of September, which included the week of unusually hot weather, represented the only week in the month in which footfall increased from last year (+2.4%) - in all other weeks during September footfall fell from last year.  The result for the last week of the month is much more positive than the result for the same week in 2010, when footfall fell by -4.5%."