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Retail in the Coronavirus Age: A New Look?

Along with tourism, and commercial real estate, Covid-19 has hit the retail sector particularly hard. In the U.K., shopping centres are empty. Job cuts are prevalent. And generally, the sector is rather doom and gloom at present. My recent venture to Brighton’s Topman, in which I was the only customer present, and the t-shirts bought were 30 per cent off, (plus a further increased 20 per cent student discount), gives a first-hand experience of the industry’s current struggle.


This venture led to me research the latest news on the sector. Low and behold, a new precedent was set just last week.


Fashion retailer New Look has played dirty against its landlords to secure its future. The company has asked landlords to agree to rents being paid based on each store’s turnover, rather than a fixed fee. New Look bosses argue that this is necessary to save jobs, save the high street, and for them to keep paying the landlords their rent.

This Company Voluntary Arrangement (CVA) is the biggest of its kind. However, there have been previous similar CVAs and demands for turnover-based rents from other notable retailers, including Sports Direct, Hennes & Mauritz, and AllSaints.


This use of CVA by New Look has drawn strong criticism, and rightfully so. The retailer has effectively torn up agreed leases to financially restructure. It brings back memories of the company’s 2018 CVA, in which it closed more than 130 stores, and reduced the rental amount on many others. Ultimately, New Look is flexing its retail muscles against landlords, hoping that the dire state of the wider retail sector will allow it to get away with such a move. Landlords need to collect rent to survive, and, in their eyes, a reduced CVA is better than no rent at all.


One would not be surprised if this case sets a new precedent for other major retailers to follow suit. For the sake of landlords, hopefully this is a one-off occasion.

Outside of the U.K., one retailer seems to be doing particularly well.


Reliance Retail, India’s largest brick and mortar retail business, is in talks with Silver Lake to buy a $1bn stake in the business. Reliance Retail is just one subsidiary of the holding company, Reliance Industries. The conglomerate sees itself branching into e-commerce to take on the likes of Amazon, and that is where the U.S. private equity (PE) group sees opportunity. This deal would be just one portion of a $5.7bn selling of about 10 per cent of the total business.

However, another reason for this deal is for investors to get closer to Mukesh Ambani – India’s richest man. Most major PE firms are already invested in Jio Platforms, Mr Ambani’s booming digital business. So, this investment into a somewhat underperforming sector could be Silver Lake’s ploy to gain greater access to investment opportunities with an influential figure within India.


These two stories show growing trends within retail. Within the U.K., the sector is in for a tough ride, and we should be prepared for job cuts to continue for years to come, alongside rent cuts, price cuts, and a shift to e-commerce. However, firms with dry powder may be able to prosper, as shown by the recent Silver Lake deal with Reliance Retail in India. Will retail get a lifeline of investments? Or is there no hope? Let me know your thoughts in the comments section down below.

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