Mike Ashley and the future of House of Fraser
Mike Ashley’s plans for a dilapidated House of Fraser are beginning to emerge; and with them, tongues are wagging.
Mike has promised to keep 80% of the stores open - but is now blaming “greedy landlords” for blocking his attempts. He isn’t exactly famous for prioritising ethical commercial decision making over driving profits. Nor is he famous for collaboration.
Melanie Leech, chief executive of the British Property Federation criticised House of Fraser for its approach to the rent negotiations.
“What has been taking place is negotiations between House of Fraser and its landlords – a two-party process – where each party will have its own interests and one party simply can’t cry ‘unfair’ in the media when it doesn’t get what it wants,”she said.
Landsec, British Land and Hammerson have all been gravely affected by the fall of Maplin and of Toys ‘R’ Us. They will have seen their value drop further simply due to the high risk that others will follow suit. Have they suffered enough? Or should they bail out their retail tenants with larger buckets of cash? Whilst there is certainly an argument for the more financially buoyant property companies to share the misfortunes of high street retailers more equitably, what is the full impact of this?
Pension funds are often the only capital large enough to fund the purchase of high street space. If businesses like Hammerson lose whole pots of pensioners’ savings because its occupiers cannot pay rent, then that will affect our high street too.
Another retail property source said:
“A lot of these landlords will be staring down the barrel.They probably don’t have a plan B so some will think this is [the renegotiation of House of Fraser store leases] quite attractive.”
After all isn’t this ‘meet in the middle’ approach simply market forces balancing the economic sales? I firmly believe that we still need our high streets. To retain these, retailers and property conglomerates must negotiate. Adam Smith’s market forces – deviation to the commercially viable – must come into play.
Ashley has come on as a substitute for Sanpower Group – HOF’s previous owners – to play a match that arguably should just be cancelled. Does he really want to win over his fans – the House of Fraser shoppers – or is this all a game for the media?
If Mike doesn’t play ball, he is the wrong sports mogul for the job.