Topic of the Week – John Lewis Faces Landmark Rent Dispute Over Click-and-Collect Sales
John Lewis is facing a High Court dispute with the owners of Brent Cross Shopping Centre over how turnover rent should be calculated in the era of ecommerce.
Landlords Hammerson and Standard Life Investments are seeking clarity on whether click-and-collect sales should be included in store turnover, which determines additional rent payments under a long-standing lease agreed in 1979, before the emergence of online retail.
The lease includes a turnover rent mechanism requiring John Lewis to pay 0.75% of gross receipts above £4m, rising to 1% once sales exceed £10m. While such structures were designed to align landlord and tenant performance, they are now being tested by the growth of omnichannel retailing.
The landlords argue that online orders collected at the store, as well as associated collection fees, should be captured within the lease’s wording covering “mail, telephone or similar orders” received, fulfilled or directed via the premises.
John Lewis disputes this interpretation, maintaining that click-and-collect transactions are completed when goods leave their distribution network rather than when they are collected in-store, and therefore should not be treated as store turnover.
The case highlights the increasing strain on legacy lease structures, many of which predate ecommerce and do not explicitly account for digitally enabled sales channels.
For landlords, including click-and-collect sales within turnover definitions could materially increase income, particularly at high-performing locations where stores act as fulfilment hubs. For occupiers, excluding such sales is critical to maintaining store-level profitability.
The outcome is likely to be closely watched across the retail property sector, with potential implications for how turnover rent is interpreted in long-dated leases.
That’s all for this week…
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