Westfield retailers demand another cut in service charges

Shopkeepers warn mall owners that they will not be placated by a recent drop in fees

Westfield London, the giant shopping mall, which celebrated its first birthday in October, is facing the threat of a second revolt by retailers over services charges this year.

It's believed that a number of highprofile retailers have told Westfield that service charges need to be reduced again, following a summer cut.

Charges fell from £13.94 per square foot to £12.98 per square foot in June. But when the mall first opened, the annual service charge was just £8.50 per square foot.

"If Westfield thinks that the cut has placated us then it can think again," said one retailer, who declined to be named. "There needs to be more."

It's thought that a number of retailers are once again looking to form a delegation and lobby Westfield for further cuts. "There is still disenchantment," said another retailer. "And that's not going to go away even with a decent Christmas – if we are lucky enough to have one."

So far more than 23 million shoppers have passed through the doors of Westfield in its first year of trading, visiting 280 retailers.

A Westfield spokesman said: "Westfield has been vigilant in its efforts at all centres, throughout the global financial crisis, to minimise service charge while maintaining appropriate service levels. This strategy will continue into 2010."

Westfield, which is listed on the Australian Stock Exchange, operates more than 100 malls across the globe.

In a recent interview Michael Gutman, UK managing director, said: "It was a very difficult time to launch a major scheme, but 12 months down the track the footfall we have generated at Westfield is well ahead of our expectations."

Last month Westfield said it was lowering rents and offering shorter leases to appease tenants in its US shopping malls.

Westfield's travails come as retailers head into the most important two weeks of the year.

Figures from the accountants, BDO, last week suggested that sales were holding up against the backdrop of heavy discounting. Total sales on the high street grew by 6.7 per cent during the first week of December.

Don Williams, head of retail at BDO said: "Although gains are to be expected, given last year's very poor results, demand does appear to be progressing well in the build-up to Christmas."

He added: "The good news is that sales so far are comfortably ahead of last year, with fashion sales very buoyant and non-fashion experiencing its strongest week since mid October, helped by a demand for luxury and gift items."

Last week a survey by the British Retail Consortium said that 58 per cent of its members expect Christmas takings to be similar to the depressed levels seen last year, and the remainder believe that trading will be better this year.