By Megan Forbes, Irwin Mitchell Solicitor
2019 was reported to be the worst year on record for retail in the UK…and then along came COVID-19. The statistics aren’t in yet, but it’s fair to say that 2020 is not going to be the year that retail bounced back. However, with change comes opportunities, and if retailers can adapt, they can certainly conquer.
Whilst pockets of the industry have thrived during lockdown, the pandemic caused a complete shut-down of the high street for four months and its recovery is being threatened by cautious consumer spending and a huge decrease in footfall. Brits are flocking back to the pubs en-masse, but it seems our willingness for a pint (or 5) is one of the few reasons we want to leave our homes these days. With the footfall on London’s high streets reportedly 80.8% lower than last year and the costs of complying with COVID guidance proving to be somewhat staggering, it is understandably a scary time for retailers.
British shopping habits have changed over the last few years, and our high streets were already struggling enormously pre-COVID. The rise in online shopping, business rates, and rent prices has created challenging conditions and caused the collapse of numerous household names. Throw in a global pandemic prohibiting people from leaving their houses, and the high streets have just about been kicked as much as they can take.
So what is the government doing about this?
Well they’re not giving us each £500 to spend at our favourite high street stores it appears, so you can forget about that. But they are investing £50m as part of the Reopening High Streets Safely Fund to encourage customers back into the stores and are allegedly preparing a £20m advertising campaign to shift the consumer mindset. And for the retailers themselves, the suspension of business rates and provision of business support grants have helped to keep them ticking over during lockdown.
But is this enough? Well, you can buy a new saddle for a dead horse, but it won’t bring the horse back to life. Large-scale job losses and branch closures have already been announced by Pret, Boots, Burger King and John Lewis, to name just a few. Intu has collapsed into administration and the chief executive of Next has referred to the crisis facing the industry as “unprecedented in living memory”. The government’s financial help will have kept most retailers afloat during lockdown, but it was impossible to have a pandemic of this magnitude without some casualties, and unfortunately there are likely to be more.
What about the legislation?
High street retailers were dealt a blow with the Health Protection (Coronavirus, Business Closure) (England) Regulations 2020, which ordered them to close.
However, some of the legislation focused on helping retailers get-by during the enforced closure. Restaurants and drinking establishments were given a helping hand with the temporary expansion of permitted development rights. The Town and Country Planning (General Permitted Development ) (England) (Amendment) Order 2020 inserted a new Class DA, allowing restaurants/cafes/ drinking establishments to provide takeaway services for up to one year.
The Coronavirus Act 2020 also suspended a landlord’s ability to take forfeiture action for business tenancies, so that business tenants who are unable to pay their rent are protected from forfeiture until 30 September 2020 (not such good news for landlords, admittedly).
Local authorities have also been urged not to enforce planning conditions that restrict times and frequency of deliveries to food outlets, in order to ensure food supplies.
And just this week, the Town and Country Planning (Use Classes) (Amendment) (England) Regulations 2020 have quite drastically rewritten the Use Classes Order. From 1 September 2020, a new Use Class E will come into effect and encompass shops, financial & professional services, restaurants & cafes, and business (which were previously four distinct use classes). Class E will also include indoor fitness, medical or health services, and day nurseries. This introduces a huge amount of flexibility to move between a range of commercial uses within Class E without the need for planning permission, allowing retailers to adapt to the situation and diversify their offering without being delayed or prohibited by the planning process.
What is the future of our high streets?
The high streets have only just re-opened, but the costs associated with the pandemic may prove too high for some to stay open. High street retailers that are reliant on high-volume sales to survive are likely to be hit hardest by social distancing measures and decreased footfall.
However, the closure of more and more chain stores will tear down the barriers to entering the high street market, leaving the opportunity for independent stores to open and thrive. And that may be exactly what our high streets need. Independent stores could bring a new lease of life to our high streets and encourage more consumers to hit the shops. COVID could reinvent our high streets for the better.
Sure, you need some guts and funding to open an independent store now, but if lockdown is anything to go by, society cares more and more about supporting local stores. With an increase in home-working and community spirit, local independent stores certainly felt the love during lockdown (#shoplocal).
And after months of lockdown, Brits are craving social interaction and experiences. We have become more accustomed than ever to purchasing products online, so e-commerce is likely to continue to be an important strategy for retailers. But consumers don’t want to live online – give them an experience, and they will come.
And it’s not all bad news. With a number of store closures already happening, retailers are in a stronger position than ever to negotiate their rent with their landlord. There is likely to be more supply of retail units than demand, so retailers can use their bargaining power to save the pennies. And with new legislation creating significantly more flexibility under Use Class E, retailers now have the opportunity to diversify their business to suit the climate.
The key with change is to adapt quickly. There are certainly challenges, but COVID has levelled out the playing field, and it’s time for local stores to thrive.
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