Woolworths and other retailers are in discussions with the Property Industry Group (PI Group), representing retail landlords, in a bid to find a joint and mutually beneficial response to the significant challenges created by Covid-19. Photo: Siphiwe Sibeko/Reuters
Woolworths and other retailers are in discussions with the Property Industry Group (PI Group), representing retail landlords, in a bid to find a joint and mutually beneficial response to the significant challenges created by Covid-19. Photo: Siphiwe Sibeko/Reuters

Pepkor, Woolies, Truworths, Mr Price, TFG offer R220 million to landlords during lockdown

By Sizwe Dlamini Time of article published Apr 14, 2020

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CAPE TOWN – South Africa’s major clothing retailers, TFG, Truworths, Mr Price Group, Woolworths and Pepkor (Retailers) are in discussions with the Property Industry Group (PI Group), representing retail landlords, in a bid to find a joint and mutually beneficial response to the significant challenges created by Covid-19.

In a statement issued by Michael Kerkhoff & Associates, the retailers said the adoption of an empathetic and constructive approach was vital to finding a workable solution benefiting all stakeholders.

The retailers commended the government for instituting regulations to allow collective negotiations in the retail property sector in order to mitigate some of the negative economic impacts of the lockdown.

The retail group said it had reviewed the scope of the relief package offered to retail tenants by the PI Group and had now constructed its own counter-proposals, which it believed were more balanced as they dealt more equitably with the permanent loss faced by retail tenants throughout the country.

The retailers said the devastating economic effects of Covid-19 should be shared by landlords and tenants. “In constructing our proposals, and due to the divergent nature of our operations, we had to find a guideline that we all agreed on, to help shape the most appropriate response in these unprecedented circumstances.”

The retailers said despite earning no revenue during the lockdown, and in the interest of collaboration and reaching agreement with PI Group, they had provisionally put aside the opinions of their legal advisers during the negotiation with the PI Group, which stated that rentals were not due during the lockdown.

They proposed, in the form of a general guideline to the industry, the payment of all utilities consumed by retailers during the lockdown, and 20 percent of normal rental and operating costs. “This equates to support by the five retailers in excess of R220 million to support landlords during the lockdown.”

They said: “Landlords are expected to significantly reduce operating costs to take into account declining economic activity.

“The prompt and firm action by our president in the face of the Covid-19 pandemic is wholeheartedly supported by the retailers. The undisputed fact is that the lockdown period has resulted in the retailers being barred from using their rental premises for their intended purpose. This has a potentially disastrous effect on our ability to meet our employment and other commitments, which may, in turn, have a cascading devastating effect on millions of South African households.

“The current lockdown affects the entire retail ecosystem, as well as the interests of the government, in deploying the taxes we pay, and other important stakeholders in our broader national context. Hundreds of thousands of South Africans earn a living from employment by retailers, and millions, directly and indirectly, live off this income through jobs with our suppliers. Furthermore, the struggling local clothing manufacturing industry is highly dependent on retailers for sustainability and job preservation and has already been significantly impacted due to the lockdown and reduced demand that preceded it.” 

The retailers said they acknowledged the PI Group had its own economic pressures and it too would inevitably be negatively affected by the Covid-19 outbreak, just as no sector of the economy would emerge unscathed.

“A co-operative position appears to be the approach advocated and facilitated between landlords and tenants globally, including in the United Kingdom, Germany and Australia, which supports our view that a collaborative stance needs to be adopted.”

The retailers said they were confident that the proposals, if implemented nationally, could offer an equitable and sustainable solution model for all clothing retailers and retail landlords, which would result in the saving of millions of jobs, both in the lockdown and beyond.

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