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Small businesses hampered by 'unrealistic' landlords and financiers

Financiers and landlords should walk the walk rather than just talk the talk, a panel of fast growing independent retailers told the Retail Week conference today.

Simon Hill-Norton chief executive of niche women’s sportswear chain Sweaty Betty, Tom Joule, managing director of lifestyle label Joules, and William Landale chief executive of furniture chain Lombok were all speakers on a panel representing fast growing small retail businesses at the event.

Lombok’s Landale told delegates that while landlords might be saying that they were falling over themselves to attract smaller differentiated retailers into their developments, they were less ready to come up with realistic deals.

He said: “They still want the vast sums of money and the ten year leases with ever upward rent reviews which are too inflexible a model for businesses of our size.”

Sweaty Betty boss Simon Hill-Norton said that brands like his, which was developing in wealthy suburbs around London, were up against branded businesses that opened shops whose costs were set against marketing budgets rather than whether they were viable sites economically. He said: “It makes it incredibly difficult to compete and keeps rent prices above where they should be.”

Joules managing director Tom Joules, which has just started opening stores on the back of a thriving home shopping business, said that the most effective way to get the sites and deals that it was looking for was to bypass agents and go straight to the landlord to negotiate. He said: “We have found that the landlords are much more ready to listen while agents are still hanging out for unrealistic prices.”

Lombok’s Landale also said that banks and financiers should rethink their approach to smaller businesses. He said: “We have come across a number of what I would call fair-weather financiers and bankers in our time. Getting the right finance support is terribly difficult. It’s a jungle out there. We are very happy with the backers that we have now but it has taken time and lots of talking to get the right partners.”

He added: “What any small business wants is a financier or banker that is going to be there for us in the difficult times, anyone can sign up to a business when things are going great.”

Joules agreed and said that he had decided to go it on his own and rely on organic growth despite numerous approaches from private equity funds.

He said: “We talked to a lot of people and we looked closely at what the private equity people do and decided that there were things we could learn from them and adapt to our business model and do ourselves. One of the problems of venture capital backed smaller businesses is that they want you to go hell for leather at opening shops or growing the business which might be fine in a benign retail climate but not necessarily the right thing for your brand when things get tougher.”

Readers' comments (1)

  • "Sweaty Betty boss Simon Hill-Norton said that brands like his, which was developing in wealthy suburbs around London, were up against branded businesses that opened shops whose costs were set against marketing budgets rather than whether they were viable sites economically. He said: "It makes it incredibly difficult to compete and keeps rent prices above where they should be."
    Except you came into our area (wrongly thinking that the St's are paved with gold.;they are, but by visitors in the summer not the locals all year round ) and you paid way to much for the unit you are currently in. Tough...should've talked to long established locals first but you thought your concept was unique

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