Rosie Davies, a senior associate in the retail team at London law firm Goodman Derrick LLP, reveals her top tips for a successful Christmas trading period.
Retailers are approaching their busiest time of year with the run-up to Christmas and the sale period that follows. But is there anything that retailers should be particularly aware of at this time of year, from a legal point of view? Here are Rosie Davies’ 12 tips to make sure “it’s the most wonderful time of the year” rather than a “bleak midwinter”.
1. Beware the Christmas Quarter Day!
Don’t forget that Christmas Day is, in fact, one of the standard “quarter days”. This means that rent and other costs (such as service charge and insurance) are often due on Christmas Day. Make sure that your payments are set up well in advance to avoid incurring interest on unpaid sums, nasty chaser letters from your landlord, and potentially serious enforcement action.
2. Do you have a “Santa Clause” in your lease?
Sorry to disappoint, but this isn’t a clause that forces your landlord to dish out presents on Christmas Eve. It is actually a clause which means that a break option cannot be exercised over the festive period. Savvy retailers will want to include a Santa Clause in their leases to safeguard their festive trading period and avoid unexpected break notices.
3. How secure are your premises?
You are likely to be closed for at least one day over the festive period – maybe longer. Do you have the right security measures in place? Have you checked your insurer’s requirements? Squatters are known to move in at this time of year as they know that properties will be empty and business owners’ attention will be focused elsewhere.
4. Signage and sale posters – have you checked your lease?
Often a landlord will impose strict controls over the type and size of signage within the premises. Signage can be particularly important during sale or promotion periods. It is therefore important to check what is permitted under the terms of your lease. For example, you may find that you are not allowed to affix posters to the window glass. Or, there may be restrictions on the percentage of the window glass that can be covered.
5. Turnover rent – what counts?
If part of your rent is dependent on the amount of turnover you generate, your Christmas sales can have a big impact on the amount of rent you will pay over the festive period. However, what exactly counts towards turnover? It is worth checking the wording of your lease to see how returned goods, or goods that are ordered online, will impact on your turnover figures.
6. Staffing
Will you need to put a ban on holidays being taken at this time of year? Will you be paying overtime to your existing workforce to cover the peak? Or will you need to employ additional seasonal staff? If so, consider what the individual’s employment status will be. Are they an employee or a worker? The former category has more employment rights.
7. How robust is your website?
If you offer online sales, your website needs to be as strong as the bricks and mortar of your physical premises. Make sure that your website is fully stress-tested to ensure that it can withstand busy periods. Customers expect websites to function properly, quickly and effectively. They are unlikely to hang around while you sort out technical blips. Equally, make sure that your IT systems have had all the necessary security checks. Data breaches can be embarrassing and potentially very costly.
8. Decorations and seasonal events – who pays?
A Santa’s Grotto or some impressive decorations can be effective ways to entice customers to visit a shopping centre. However, are you covering the cost via your service charge? Sometimes such costs are shared between the landlord and the tenants and there may even be a cap in place. For example, saying that promotional costs cannot amount to more than 10% of the total service charge.
9. Alterations – how far can you go?
You may be planning to reconfigure your store in the run-up to Christmas to ensure you stay a cut above the competition. Some leases have particularly strict regimes which state that any alterations – even those that are not structural – require the landlord’s consent. This may be a lengthier process than you had anticipated.
10. Logistics – plan ahead!
No doubt you have analysed last year’s data to see which products sold best. However, are the contracts you have with your logistics providers fit for purpose? You cannot afford to be let down at this time of year.
11. Looking after your data
Most sophisticated retailers now collect customer data relating to buying and spending habits as well as the traditional name, address, age, etc. Data is hugely valuable for retailers as it educates buying habits and behaviours. Many retailers now have loyalty schemes that enable them more easily and lawfully to collect and exploit customer data in return for rewards or reductions. Are you clear about what you can and cannot do with this information? Make sure that you have received proper advice on this tricky area.
12. Keep open – but for how long?
There may well be a late-night shopping event planned in the run-up to Christmas. Your lease may well specify minimum hours of opening or prohibit you from closing for a prolonged period; it is worth being aware of these requirements so that you can plan your staffing arrangements accordingly. The landlord may also be able to specify alternative hours. It is worth having an early conversation with the landlord about any special events that may be planned.
Rosie Davies is a senior associate in the retail team at Goodman Derrick LLP, the London law firm.
