AS I SEE IT: TERRY MURDEN
As if the crisis on the high street wasn’t bad enough, the latest shockwaves have brought us closer to the point of no return for the giants of bricks and mortar shopping.
Conflicting messages around the future of Jenners in Princes Street, Edinburgh, first that its owner Frasers is leaving, and then that a new store would emerge, have only heightened uncertainty.
The statements around Jenners followed news that all remaining Debenhams outlets will close, the latest victim of what is now turning into an aggressive war with the online-only retailers.
Boohoo, barely out of retail infancy, snapped up Debenhams for the paltry sum of £55m and twisted the knife by announcing that it did not want the stores. None. Nor the staff they employed. Then came a statement from fellow online giant ASOS that it is in talks to gather up the leftovers of Top Shop chain Arcadia’s collapse. The pincer movement was gathering pace and had gone in for the kill.
Jenners was not even granted the consolation of a new upstart owner, but it is fighting a battle over rents which is partly a result of the same online onslaught. Frasers, having failed to persuade the building’s billionaire Danish owner Anders Povlsen to reduce his prices, announced it would shut up shop, putting another 200 retail staff on the scrapheap. Povlsen insists it will reopen without Frasers, though he may have a new fight on his hands over the Jenners name.
Whatever the outcome, there are many who believe Jenners, like Debenhams, is part of the retail landscape that is beyond its sell-by date, no longer offering a must-go destination service.
As it is, there are two scenarios: Jenner’s owner, Frasers, majority-owned by Mike Ashley, could be calling Povlsen’s bluff. The Dane says he wants to put a hotel and cafe in the building, along with new retail. But with retail at rock bottom there is hardly a queue forming. Luxury brands could provide a solution, but Jenners is a big building, and with a sitting tenant at a time of serious pressure on the sector it may be that the owner opts for the devil he knows. Even at this late stage, maybe the richest man in Scotland can be persuaded to do a deal with retail’s warrior-in-chief.
Povlsen’s camp argues that Frasers was already enjoying a substantial rent reduction and rent free periods to cover all lockdowns. It said that the Jenners name will survive in another form.
Ashley is a tough negotiator and has shown he is ready to walk if the deal is not right. Rent was a factor in his decision to pull Frasers out of its other Princes Street store, now being converted to a whisky tourism venture. Given that administrators are duty-bound to take the best offer it is assumed he offered even less than Boohoo for Debenhams.
Nor should it be forgotten that in 2019, just a year after acquiring House of Fraser, he said he regretted buying the business and that with hindsight “we might have made a different decision in August 2018.” On that score, he will not want to be mugged again.
There remains speculation of Jenners re-emerging elsewhere in the city, though the odds are lengthening given that the prospects for department stores are diminishing almost by the day. Ashley himself seems torn over what to do with Frasers; on the one hand wanting to turn it into the “Harrods of the North”, on the other preferring to follow his ‘stack ’em high, sell ’em cheap’ instincts honed as owner of Sports Direct.
‘In the end, money does the talking and the only salvation for bricks and mortar retail may be in small independents (no bad thing) and in an online tax to even things up’
Britain, once known as a nation of shopkeepers, has been a nation of shoppers for at least a half century. But we longer need the shops and our high streets are begging someone to give them a new purpose. Committees, commissions, task forces and steering groups have discussed, argued, brainstormed and written copious reports on what to do to stem the flow of closures. They have all dismally and emphatically failed.
In the end, money does the talking and the only salvation for bricks and mortar retail may be in small independents (no bad thing) and in an online tax to even things up. The Chancellor is said to be looking again at the idea and given the millions being made by the online retailers the odds are shortening on some form of levy.
The continued erosion of retail, particularly big retail, does not bode well for those in the commercial property sector who are having huge volumes of vacant premises dumped on them at an unwanted rate. As the middle men bringing buyers and sellers together they not only have a role to play in bringing about change, their own industry depends on it.
The closure of department stores makes their task more difficult as they represent more than just the loss of famous names; it removes key anchor tenants which traditionally help draw others to a location. Losing Debenhams will be a blow for Ocean Terminal at Leith.
The St James Quarter, due to open at Easter, is drawing retailers which are new to Scotland. They will help give it a fighting chance, though it also has an anchor tenant in John Lewis. It has not had an easy time of it, though it has been more fleet of foot than Jenners, Debenhams and other former retail stalwarts such as Woolworths and Bhs. John Lewis was already ahead of the game in combining bricks and mortar with online sales and it is now expanding into recycling, savings, insurance, even private rented and social housing. These may provide some protection for its stores and help build brand loyalty among customers.
Princes Street must reinvent itself quickly. The loss of two and possibly three department stores would be a big blow and the retail standard would be left with Primark, which is expecting a £1bn loss of sales because of the pandemic. Prospects for retailers aren’t getting easier any time soon.