I am reminded of this incident as the shopping centre industry feels the full force of the recession.

Not a day goes by when retailing isn’t headline news. We’ve seen the demise of Woolworths. We’ve witnessed the razzmatazz surrounding Westfield London, followed within days by an unseemly row over a reported huge hike in service charges.

We’ve also seen Boots landed with a huge legal bill after a High Court judge dismissed its claim that Santa’s grotto should be considered a promotion and as such the landlord does not need to foot 50 per cent of the bill.

These cases have prompted the BRC to repeat its call on landlords to improve service charge transparency. Without a doubt, this will also have caught the eye of government, and in so doing increased the risk of greater regulation and all the undesirable consequences that go with it – extra costs, added bureaucracy and greater complexity in an already complex system. The Trafford case is a skirmish in a long running battle. But is there a danger that shopping centre owners could win the battle but lose the war?

In my view it is unlikely that solutions will be found in contracts drawn up in a totally different era. The only way for owners and retailers to survive the recession, and to avoid the grave that is more vacant shop units and government regulation, is to lock arms in 2009. Both parties need to fundamentally rethink their working relationship. The targeted reduction in service charges by a group of major landlords and retailers is a good example of this in action.

Remember, if either party gets blown off the mountain in 2009 the consequences could be fatal.

Howard Morgan

managing director, RealService

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