The recovery in the brick and mortar trade sector in the United Kingdom was reflected, according to new data showing low turnout during the month of September amid new epidemic restrictions and concerns about a second wave of infections with the Coronavirus.
The number of visitors on the UK’s main streets and at other retail destinations fell 33% last week compared to the same period in 2019, according to data from the British Retail Consortium and ShopperTrak. This represents a significant deterioration since the first week of September, when turnout was down only 24% year-over-year.
At the start of the UK-wide lockdown in March, turnout was down by more than 80% even as online sales boomed, but over the summer the number of people visiting stores steadily increased as lockdown restrictions eased and the number of Covid-19 rejected.
The separate turnout numbers from data company Springboard showed a similar decline in turnout across the UK last week, as major streets typically suffered a significant drop. The 10pm curfew in bars in England appears to have a particularly strong effect, with the number of people on the streets dropping by more than a third between 10pm and midnight on Friday.
The drop in turnout could cause further difficulties for landlords as the quarterly rent day falls on Tuesday, when many property owners collect payments covering the previous three months.
Commercial tenants across the country have withheld rental payments in recent months as they have struggled with cash inflows, and this month the government extended a ban in April on evicting business tenants until the end of the year, in order to protect businesses affected by the pandemic.
Data from technology company Re-leased, which facilitates rent payments, indicates that commercial property owners collected 68% of the rent owed for the April-June period, in a snapshot taken 60 days after the rent day in June. This was in line with 67% in the January-March quarter but well below the 84% rate recorded in December, before the coronavirus was discovered outside China.
Caleb Dunn, commercial analyst at Re-leased, said there is unlikely to be a major jump in payments this quarter given the continued uncertainty around the retail environment.
There is also evidence from previous quarters that landlords are increasingly giving rent discounts to tenants, he said, which is another possible sign that tenants are suffering.
Ian Wilkinson, partner at Osborne Clarke law firm who advises landlord clients regularly, said landlords were ready to hire hospitality in particular for the struggle in the coming months after the introduction of the “rule of six” in England, early closing times and various closings.
He said some landlords expected to collect only 20% to 50% of their rent for the quarter from hospitality companies, but retail property owners were a little more optimistic, expecting to collect between 30% and 70% of the rent due.
Richard Lim, chief executive of the consultancy Retail Economics, said that retail property owners face “significant challenges” in the future because of their dependence on retailers of clothing and footwear. Lim said that clothes and shoes account for about 40% of space in malls, but the sub-sector has been hit hard by lower demand for new clothes from people stuck in their homes.
Lim said the disproportionate boom in retail trade meant that retail conglomerates – more spacious for distances and less reliant on public transportation – were proving to be more resilient, while businesses with strong online operations also benefited.
