The Centre for Retail Research (CRR) estimates we will see more than 20,000 permanent store closures this year, an increase on the 16,000 we saw in 2019, which will have the potential to trigger nearly 250,000 job losses as a result of the financial reckoning faced by the retail sector as a result of Covid-19. A number of retailers have evidently witnessed a dramatic decline in their turnovers of up to 100 per cent, since March 23rd when the government ordered all non-essential stores to be closed during the pandemic. Despite government intervention measures put in place to support businesses, a series of measures including loans, grants, business rates holidays and a furloughing scheme, retailers are asking the government to support a “furloughed space grant scheme” where the state would cover the fixed costs of businesses that have experienced dramatic falls in turnover.

In mid-April, a number of the UK’s biggest retailers wrote to Chancellor Rishi Sunak warning that many currently viable businesses will undoubtedly need to file for administration, leading to substantial job losses, if the government does not do more to support the struggling retail and leisure sector, particularly with their rent payments. The British Retail Consortium and the British Property Federation have outlined that commercial tenants and landlords propose the government should introduce a scheme of rental support for the space that has in effect been furloughed, in the same way staff have been.

Many retailers believe the three-month moratorium against eviction for non-payment of rents proposed by the government is not enough to help them survive. Many state they are unable to take advantage of business interruption loans because lenders are reluctant to lend to shops and that even full use of these loans would only support their businesses for a matter of weeks or months.

With little or no turnover from trading, ongoing payment of property costs will become increasingly more difficult for retailers which could lead to further collapses. This, in turn, will have a serious knock-on impact on landlords, including UK pension funds, listed companies and private investors.

In the last six months, we have indeed seen a number of high-profile retailer and leisure operators file for administration. Clintons and Bon Marche did so toward the end of 2019 while Debenhams filed for administration in early April, just before the Covid-19 outbreak, for the second time in a year.

Laura Ashley was the first high street casualty since the beginning of the pandemic, while department store chain Oasis and Warehouse, owned by Aurora Fashions became the latest retailer to file for administration. Other high profile retailers that have also recently deployed the rescue procedure, whereby a moratorium on legal action against the company by creditors is imposed allowing the company breathing space to reorganise its financial affairs, include Cath Kidston, Carluccio’s, Chiquitos and Brighthouse. Both Laura Ashley and Cath Kidston have since found buyers for their brands but their physical stores are all set to close.

The resilience out-of-town assets have shown to non-essential closures at the outset of the pandemic, certainly in relation to high streets and shopping centres, is echoed when collectively analysing the portfolio spread of the operators currently under administration. More than 1,500 units have a question mark over their future, belonging to one of the retailers that have filed for administration in the last six months. Out-of-town assets are responsible for only 12% of these whereas high streets and shopping centres however have far greater exposure accounting for 43% and 37% respectively (see below).

_{Read the articles within Spotlight: The initial impact of Covid-19 on the retail and leisure market below.}