- Collapse of Game highlights rent quarter crunch point and signals another wave of shop closures
The deadline for towns to bid for a share of £1 million to help them boost their local High Street runs out this week. Communities have until 30 March to submit their application to become a “Portas Pilot” and receive funding and help from the Government under a new scheme launched by Mary Portas earlier this year.
The scheme has already sparked widespread interest from towns across the UK, with many already submitting their bids ahead of Friday’s deadline. However, the entire scheme risks being undermined through a lack of funding according to Helen Dickinson, head of UK Retail at KPMG. She said:
“Mary Portas’ mission to rescue the British High Street has struck a tone with retailers and communities across the country desperate to access the support they need to save their local High Street. The sheer number of towns bidding for funding shows how widespread the problem is in the UK. No High Street seems immune from the battle of survival.
“Portas has put the challenge of managing local conflicting agendas and rivalries squarely on the shoulders of the community. Exactly how the scheme will be measured is yet to be clarified. But in spirit this concept of local community teams working together to come up with innovative ways to improve the high street is exactly what is needed.
“However, given the scale of the challenges facing the modern high street, a share of £1 million will hardly scratch the surface. To give this pilot the best chance of success then the source and magnitude of proper funding must be addressed. Without it these local communities won’t be able to make real changes and implement and experiment with innovative ideas.
“Portas has sparked the imagination of many retailers and communities across the UK: all of whom are keen to secure the future of their local High Street. Now if she can help these community groups work out where the cash will come from, then this could be a first step to bringing some of Britain’s high streets back from the brink.”
Since December, there has been a raft of high profile retail failures with companies such as Game, Blacks, La Senza, Bonmarché and Peacocks all calling in administrators. Brian Green, restructuring partner at KPMG, commented:
“Once again we have seen the traditional rent quarter date tip another struggling retailer into administration with the collapse of Game and the announcement of nearly 300 store closures. The culmination of persistently suppressed consumer spend, large rent bills and huge debt facilities is a toxic cocktail that many retailers are unable to recover from. Certainly moving to monthly rents can be a huge relief to a struggling retailer but, for many, their property portfolios are completely out of synch with their sales. While we have seen company voluntary arrangements used to restructure property portfolios since 2008, there have been few high profile CVAs in the past year. In the case of stressed and distressed businesses this is usually because a company’s problems run too deep for a property portfolio fix. Certainly the Portas review has raised the profile and understanding of the issue but financial support to the tune of thousands is unlikely to help those retailers that are beyond redemption.”
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