Against a challenging and fast evolving backdrop, Richard Oldfield, Construction Director at Sigma, discusses transformational considerations and options for retailers as they seek to navigate the complexities of today’s environment.

From capital investment programmes both on and offline, to ‘portfolio rightsizing’, the creation of dynamic multi-occupancy estates and multi-purpose facilities, retail brands are searching for the right blend of corrective action to ensure they meet the demands of a developing market.

 

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Richard Oldfield, Construction Director at Sigma

It is no secret that some sectors of the retail industry have been adversely affected by the Covid-19 global pandemic. And for an industry already contending with ever-increasing overheads, reduced footfall and a paradigm shift towards online, all of which are continuing to result in declining sales, it draws a seemingly unavoidable conclusion – an increase in store closures.

Proactive approach

As retailers continue to traverse the challenges of a much-changed landscape, it is essential they take a proactive approach. Only by acknowledging that change is occurring, and by engaging with key stakeholders, can brands begin to explore the options available to them to ensure a smooth and cost effective transition.

For those businesses that simply cannot afford to continue trading due to debt and/or the inability to generate or borrow cash quickly enough, entering administration may be the only option. As part of the process, it is important brands engage with the administrator to understand the value of the business. By doing so brands can leverage their assets, inventory and business to repay creditors and try to safeguard the continuity of the business.

Whether planning store closures or exploring alternative options such as multi-occupancy or multi-purpose facilities, the period leading up to any closure, and the closure itself are two critical times during which the landlord should be consulted.

An experienced landlord can assist not just with store closures, but with the wider scope of any works that may be required. Whether that is with rent reductions, negotiating new or terminating leases. 

Often overlooked, physical stores have realisable assets, that can be identified, asset tagged and re-utilised or refurbished to maintain the wider chain, or sold to mitigate costs of closure.

Amidst a particularly challenging time for some retailers, store transformations, store closures, or perhaps even property portfolio rationalisation, are some of the possible options brands may need to consider.

For those agile enough to respond to shifting consumer behaviours and effectively redefine the experience and omnichannel service they deliver for shoppers, there are opportunities to remain profitable. This may mean integrating new services for a broader shopping experience, or re-defining spaces to create more flexible commercial space, for example converting space into a local click and collect hub.

Regardless of the choices to be made, being able to call upon a partner with over 20 years’ experience in transforming spaces, can ensure a smooth, professional and cost-effective resolution to store and estate re-balances. For more information, visit: www.sigmagrp.co.uk

Look out for our second article in February, a deep dive into the transforming retail landscape and the measures helping brands navigate the complexities of today’s environment.