Stanfords may have to map out new home for flagship

Bookshops are finding it harder to justify spots in prime retail locations, business chiefs have warned, as rising rents and business rates continue to be a scourge of the high street.

The caution follows the news that Stanfords’ flagship may be forced from its home on Long Acre in Covent Garden, central London, after 115 years, with a lease review deadline by landlord Picton Capital due in September. The hike in the price of the lease means the shop’s running costs, including business rates and bills, will have increased by 60% in five years, the firm’s former m.d. Tony Maher said earlier this month.

Firms will also be hit by a business rate increase in April, when more than 100,000 London companies will face a hike of more than 3%, higher than the rate of inflation, according to the Altus Group, which provides data to the real-estate industry.

Waterstones m.d. James Daunt suggested that the increasing pressure on central London bookshops, including the "inexorable" rise of online shopping, could see their days numbered in prime spots in the capital. However, he said outside London, rents were actually decreasing. "There is very little upward pressure on rents at the moment, except in the prime pitch retail areas of central London. In these, as Stanfords is finding out, it can be brutal," he said.

"With a lease portfolio as diversified as that of Waterstones, savings outside London balance— or in fact exceed—the increases inside the capital. The only silver lining of the inexorable rise of online, and the pressure on high street retailers, is that rents are having to adjust downwards."

However, Daunt said that "what does need to be done is for rates to follow. Rateable values need to be reassessed as often as rents, at the very least." He added: "Better still, rates should be recognised to be an iniquitous tax and replaced by something less penalising for the high street. Beyond this, I make the general observation that bookshops will rarely justify prime retail locations. The closest Waterstones now gets to this is Piccadilly, but even here it is nowhere close to as desirable a situation as Bond Street, or Oxford Street or, indeed, Long Acre."

Vivien Godfrey, executive chairman of Stanfords’ board, who now leads the Stanfords management team following Maher’s departure earlier this month, agreed with Daunt that it is getting harder for bookshops to stay in central London. "If bookshops are going to remain just selling books, it is going to be hard for them to make the margin and they are going to have difficulty," she said. The company is in the process of repositioning itself as a "travel emporium", a one-stop shop for travellers, and intends to add more products into its mix, she added.

Godfrey, executive chairman and major shareholder of the retailer, who follows in the footsteps of her father and grandfather in holding the position of chairman of the firm, said she was still "in discussion" with the landlord about renewing Stanfords’ flagship lease. However, she added: "It is a possibility we will move premises before September 2018. I have been going to our Covent Garden premises since I was a little girl and the area has radically changed. My feeling is that there are more pedestrians and shoppers in London that are not particularly Stanfords customers. So the building we are in now might not always be right for us. We need to think about where the right place for us might be.

"We had a really good customer survey, conducted by Nielsen, which helped us better understand who our customers are, and why they shop with us. We will use that information when we make our decision about moving."

Earlier this month Maher resigned from his role following a disagreement about the direction of the company, although he did not disclose specifics. He said at the time: "This year [2018] marks Stanfords’ 165th year of trading and the company is faced with the biggest decision that needs to be made in over 115 years: The lease comes up for renewal at its iconic London location in Covent Garden and the company is yet to make a decision regarding its future intentions."

He continued: "I didn’t quite agree with the board’s ideas for the future way forward. It is for that reason that I decided to resign. Many of you who know me well would know that I am extremely passionate about what I do—and I felt that it would be wrong for me to lead a business in a direction that I didn’t agree with."

Last week, chancellor Phillip Hammond revealed he would bring the next business rate revaluation forward a year to 2021, and thereafter revaluations would occur every three years instead of every five, which he claimed would enable "a fairer reflection of rental values".

However, the announcement was met with muted enthusiasm from retailers, with Tim Godfray, chief executive of the Booksellers Association, saying the system demanded “a more fundamental reform than mere tinkering with valuations from one year to the next”.

One bookshop which has recently been hit with a business rates increase is Big Green Bookshop in Wood Green, north London. Its bill rose to £9,600—around £600 more than it was previously. Shop owner Tim West said: "Our rent hasn’t gone up in 10 years, but our rateable value has shot up from £18,000 to £25,000. It will be a burden."