A Strong Voice for Croydon Central - Gavin Barwell MP
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Trying to save Allders
15/06/2012 19:21:00


The news that Allders has gone into administration today, putting at risk over 850 jobs, is the latest of a series of blows to strike our town over the last 12 months.

Both the Leader of the Council and I were contacted by the Chief Executive of Allders earlier this week to alert us to the fact that the business was in trouble. We did everything we could to help - the Council offered to defer the company’s business rates, we persuaded Allders’ landlord to waive their rent payments and we contacted Mark Prisk, the Minister for Business & Enterprise, and met with his officials yesterday, but with creditors turning up at the store to remove their stock while we were meeting it was clear that the game was up. If Allders had contacted us before they were in such a deep hole, we would have had more time to put together a rescue package but it is no good dwelling on what ifs - we need to focus on finding a buyer for the store and getting new investment into our town.

The medium-term prospects are actually very bright. Two of the biggest retail developers in the world - Westfield, who own two shopping centres in London at Shepherds Bush and Stratford; and Hammersons, who own Brent Cross - are interested in investing hundreds of millions of pounds in Croydon to redevelop the Whitgift Centre. That’s what’s needed to reverse the decline of our shopping district and bring top brands like John Lewis, Apple and Gap to the town, which will in turn support more independent shops.

At the moment, though, we have stalemate. Westfield have signed an exclusivity agreement with the Whitgift Foundation, who own the freehold of the Centre; Hammersons are the preferred partner of Royal London Asset Management and the Irish Bank Resolution Corporation, who between them own 75% of the leasehold interest.

We urgently need to find a way to break this stalemate. We can’t afford to wait two or three years for Westfield and Hammersons to battle it out in the courts while our retail centre continues to decline. And major investment in our shopping district is the catalyst we need to secure other investment in our town - there are a number of major residential schemes with planning consent that are not financially viable in the current housing market, but that would become viable once it was clear that Westfield/Hammersons was definitely going ahead. I am meeting with the Mayor of London shortly to ask him to intervene to break the deadlock.

In the meantime, I will be working with the Council and the administrator to try to find a buyer who can bring Allders out of administration. And the best thing all of us can do is to go and support the store, which has been part of our town for 150 years.

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Readers' Comments

On 21/06/2012 12:11:00 Croydonsfuture wrote:
I give you credit for your attempts to salvage something from the Allders’ disaster. However, I would beg to disagree with you on Croydon’s medium term prospects being “very bright”. Croydon has lost its two iconic businesses – Nestle and Allders. Not only have we lost Croydon’s two largest private sector employers, but their departure further damages Croydon’s image as a business location. Croydon’s general image has hit rock bottom given its indelible association with last August’s riots. The independent Centre for Cities 2011 analysis of Croydon’s long term employment prospects makes for bleak reading. Many Croydonians would say that far from the medium term prospects being very bright, that Croydon appears to be entering a downward death spiral.

Instead of (unrealistically) bigging Croydon up, maybe we should admit that it is in a full blown crisis? If we are honest in admitting Croydon’s current dire state, then that - at least - would be a good starting point for lobbying the London Mayor and central government for the sustained investment that Croydon so desperately needs.

You comment on Hammerson and Westfield’s interest in the Whitgift Centre. Personally, I’m sceptical. I’m reminded of the failed Park Place retail development scheme of a decade ago. Despite huge hype, this redevelopment never happened – despite a much more favourable business environment at the time.

I fear that Westfield has expressed an interest in many sites so as it can play off sellers so as to extract the very best deal on the eventual site it selects. The very vague plans that Westfield recently presented to the Council’s Strategic Planning Committee suggest that its interest is tentative. Hammerson is more sincere in its Whitgift ambitions – provided it can secure the centre at a bargain price. Hammerson bought Centrale for a song and I’m sure it hopes to acquire the Whitgift for a similar bargain basement price. A bargain price is possible as 50% of the Whitgift lease has been “inherited” by the Irish Bank Resolution Corporation. Hammerson’s investment isn’t so much an endorsement of Croydon’s retail vitality but evidence of the rock bottom prices at which Croydon’s existing landlords/leaseholders are prepared to sell at.

Many independent observers would argue that any regeneration for Croydon will require very substantial and sustained government investment. Unfortunately, as the stalled Ruskin Square, Menta and Iylo developments evidence, big private sector investors are failing to see projects through to completion. Realistically, the scale of government investment needed to turn Croydon around would be an order of magnitude of the much touted £23m that the Mayor granted in the aftermath of the riots.

One regeneration strategy that was being proposed by the Council as recently as a year ago was persuading government departments to relocate from central London to Croydon. This seems to be an eminently sensible strategy. Central government gains as it cuts costs given that Croydon’s rents are a fraction of central London levels. Croydon gains substantial employment. However, the only success to date has been in attracting the Land Registry's headquarters from Lincoln’s Inn Fields to Croydon. Interestingly, this relocation allowed the Land Registry to sell its Lincoln’s Inn Fields property for £37m. Although this rare success was welcome, it brought a very modest number of new jobs into Croydon. Alas, it’s true to observe that inertia rules for government departments – they won’t be rushing to relocate to Croydon unless effective pressure is applied. We really need a concerted push on securing sizeable government department relocations.

Although large private sector investors such as Stanhope/Schroders, Menta and Minerva have disappointed, there is scope to attract small businesses to Croydon given its abundance of vacant office space and very low rents. Evidence that this strategy has real potential is offered by Saif Bonar’s private initiative with Matthews Yard.

However, Croydon’s attractiveness for small businesses would be greatly enhanced if it could offer discounted business rates in addition to its low rents. For most small businesses, rates are the third largest cost after payroll and rent. The obvious way of reducing business rates is to secure Enterprise Zone (“EZ”) status which offers a rates reduction over 5 years for new businesses. The discount is capped at £275,000 over the 5 years. This enticing benefit, together with the sea of very cheap office space that Croydon is awash in, would make Croydon a compelling small business location.

Many small businesses prove to be very dynamic. A well developed small business sector can be a powerful long term source of new jobs. If Croydon can establish a reputation as a small business incubator, this sector could grow so as to become a significant employer in the longer term.

However, Croydon’s attempt to secure EZ status was rejected in August 2011. Given that Croydon was still reeling in the aftermath of the riots, this denial of EZ status was bizarre in the extreme. Newham provides a precedent for a London Borough securing EZ status. It’s galling that Newham was awarded EZ status – despite its tidal wave of Olympic investment. Surely, given the loss of Allders and Nestle, Croydon’s current need for EZ status is greater than Newham’s was? Despite the previous refusals, we need to apply again for EZ status. This time, we need to pull out all the stops to finally secure it.

Croydon’s current denial of reality reminds me of Spain’s recent situation. Up until a fortnight ago, the Spanish PM and Finance Minister were adamant that all was sound. However, although requesting a €100 billion bailout is a bitter pill for a proud nation to swallow, there is a sense that Spain’s political class are belatedly facing up to reality. Perhaps this acceptance of reality is a first step in Spain avoiding catastrophe. For Croydon, like Spain, it also needs to face up to reality if it too is to break out of its downward death spiral.

On 22/06/2012 07:52:00 Gavin Barwell wrote:
My reference to the medium-term prospects being "very bright" referred specifically to the retail sector (though as I go on to explain I think if we can land Westfield or Hammersons that will be the catalyst for other major investments). I agree that the town faces significant challenges and that Government funding may be required to get certain sites redeveloped (thought realistically we are not going to get "an order of magnitude" greater than the £23 million we got post-riots). We recently got money from the Growing Places Fund to catalyse the Stanhope/Schroders scheme on the Gateway site and money from the Get Britain Building Fund for New South Quarter.

I also agree re relocating Government departments but this will take time - it relies on leases on existing buildings in SW1 coming to an end.

I also agree re small business. The Council is going to use some of the £23 million to incentivise new businesses to locate here. You are wrong to suggest however that the Government rejected a Croydon bid for Enterprise Zone status - the Council didn't want to go down this route because it would mean handing over planning powers.

On 22/06/2012 10:51:00 S Sharp wrote:
Allders is unique to Croydon.

It is not convenient for me to shop in Croydon but I would always come in to shop at Allders and at other shops in the process.

Without Allders, there will no longer be the incentive to do so.

On 25/06/2012 22:58:00 Anthony Miller wrote:
"If Allders had contacted us before they were in such a deep hole, we would have had more time to put together a rescue package"

The trouble is its a PLC and part of an interconnected business empire and Harold Tillman going to the Council and saying "we're running out of cash" wouldn't have done much good to Allders share price or to the share prices of the other companies he owns. In January 2012 the Daily Mail discovered that Hong Kong-based supplier Regent Trading Limited had agreed to cancel a £300,000 Allders debt in return for one share - how long had Tillman been bailing it out for?

Then again maybe there's still more we can't see yet. Tillman's entire financial empire has been in collapse recently so maybe there's a domino effect here and trade at Allders isn't actually as bad as we think but who knows? Still with nearly 2/3 of the staff working in concessions what was going to happen to the soul of the business, let alone its cash? Without a soul businesses don't make cash. Maybe a new invester could make it with Allders. There's still hope - but it needs someone with vision not just cash. For example the website was awful indeed non existent for many years - why? I heard someone say large department stores are dead but I don't think so. Rarer perhaps but I think rumours of their death may have been exagerated.

Anyway there's a lot more going on here than first meets the eye...

On 02/07/2012 16:32:00 R SHA wrote:
Re: Allders Croydon - I would like to urge the Council not to let Allders go. A lot of people will be jobless. The charm of Croydon will go away.

I would Urge the Council to do SOMETHING ASAP. Without Allders, Croydon would not be the same. I feel sorry for the staff in Allders

On 11/07/2012 18:17:00 Darth Zeidah wrote:
Allders' administrators are being less than transparent with the company's customers.

I placed an order for furniture and placed a deposit in the spring, when I was given a delivery date of mid- to late June. That date has, of course, long passed. Allders sales staff who, up to then, had been more than affable and obliging did not contact me or return my calls. Meanwhile, the administrators made their public announcement on 15 June 2012.

All my efforts at trying to ascertain from Allders store staff as to what has happened to my order have run up against a blank wall of opacity, deviousness, weasel words and obfuscation. Having prised the administrators' phone number from a (very reluctant) Allders telephone operator I called them, only to come up against yet another obstacle course placed in my path to find out where my goods are.

I placed my order with the company in all good faith and, as a sign of my intention to keep my side of the contract, I paid a substantial deposit.

When - or even if - Allders will keep its side of that bargain remains to be seen.

On 11/07/2012 19:42:00 wendy mortimer wrote:
h i know the rents are way to ..ALLDERS is a store like REEVES that it belongs to croydon.maybe if the rents were not so high in croydon town centre ,more shops would
On 11/07/2012 20:30:00 Dr. Tanmay Sarkar wrote:
Croydon without Allders is hard to imagine. Obviously it is a major blow. I think as Croydon Central MP you really need to some Central Government to provide some real help.Some money needs to be invested for infrastructure development at a faster pace. Absence of private funding means money needs to come from Government.
On 11/07/2012 22:58:00 Jim wrote:
Well it's very sad but it's time had come. It had already gone bust once. Since then I had been in three times to shop and each experience was negative. On the last occasion I went to a checkout where two girls were chatting. "We're not open" they said and gestured to another position. The woman there said she wasn't open and asked if they other girls had sent me there. I said they had - she replied they shouldn't have. All that hassle to spend £40 on a pillow.

Then there was the kitchenware episode. Didn't have the coffee machine I wanted, thought the display suggested they might have. Found a member of staff - wasn't his department - there should be someone over there, he said. There wasn't, I said. He would call someone. Ages later a woman appeared to tell me that if it wasn't on display then they didn't have it. I pointed out the label on the display. Oh, she said. Probably on the next shipment. Didn't know when it would be, or for sure that the item I wanted would be on that shipment. Needless to say, I bought it on Amazon and it was delivered the next day - and for less than the Allders price. (I was happy to pay more on the basis I could get it from the shop but it wasn't to be.)

I've lived in Taiwan where department stores open until 10pm 7 days a week. Excellent service and superb food courts. In these days of online shopping, a department store with surly staff lolling around is doomed to fail. Not all bad at Allders but just inconsistent. I'm glad public money wasn't poured down this hole (deferred rates or otherwise). Many small businesses work hard to provide excellent service. Why should they and consumers be taxed to prop up failing ventures whose time has come?




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