June 15, 2021

Is there light at the end of the tunnel for the retail and hospitality sectors?

This is being attributed in part to a shortage of staff from the EU following Brexit.  However many UK workers previously employed in these sectors are also reporting that they have found alternative work during furlough. They do not want to return to their previous positions which they deem to be too unstable (or, in the case of hospitality come with more difficult working conditions and anti-social hours than their new roles).

This need to pay significantly increased salaries to attract and retain staff is yet another challenge for the already beleaguered retail and hospitality sectors. Whilst most businesses have now re-opened, footfall has not yet returned to the levels hoped for and the implementation of Covid-19 safety measures has both increased costs and decreased the number of customers that can be served. Some retail and hospitality outlets say they are trading at a loss at present and there is certainly no room in the budget to pay extra staff costs.

Many are also now worried about the fast approaching end of the moratorium which has, until now, prevented landlords taking action for rental arrears. If the moratorium is not extended beyond the end of June we are expecting a flurry of activity from landlords in July as they start to send in bailiffs and take insolvency action against their tenants to recover rental arrears.

Now that the rule relaxations expected on June 21 have been delayed, and with the new Delta variant of Covid-19 causing concern, businesses would be forgiven for thinking that the future seems bleak. But there is light at the end of the tunnel and things they can do to help themselves through the coming months.

Vicky Hernandez, a real estate partner in our retail team, suggests “as difficult as it is, tenants really should talk to their landlords about rental arrears to try and reach agreement on how they will be dealt with. Most landlords do not want to take aggressive debt recovery action when this may simply result in putting their tenants out of business. But they have their own outgoings to pay and can’t just ignore the position where a tenant isn’t paying but isn’t communicating either. In my experience, landlords and tenants who have worked together have often managed to agree a compromise where some debt is written off and the rest is paid back over time and this really is a win-win for both parties concerned”.

And as for staffing issues Kate Benefer, our employment partner explains, “in times like these the most successful employers tend to be those who get creative. Where employers are unable to compete in relation to high salaries, other perks can be used to recruit and retain staff. We have seen success with clients offering flexibility and additional non-cash benefits such as extra holiday or sick pay. Employees who feel valued and as if they have future prospects with a business are more likely to stay, so training and development is also important”.

It is clear for these beleaguered sectors don’t bury your collective heads in the sand. Talk to your landlords and think creatively about how you can recruit and retain your staff.

If you have any employment related enquiries, Kate Benefer would be delighted to assist and can be contacted on [email protected] or 01865 268 639. Vicky Hernandez is on [email protected] or 01865 264033 and can help with real estate or any other retail or hospitality related enquiries.

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