RETAIL giant John Lewis is threatening to pull the plug on its flagship Edinburgh store in a row over a long-awaited new £850 million development for the city.
The company has warned the entire viability of the St James project will be put at risk if it is forced to cut the size of its store while building work on the controversial scheme is carried out.
The scheme will not be viable or have a prospect of successJohn Lewis
John Lewis, the “anchor” tenant of the existing St James Centre – one of the capital’s most notorious eyesores – faces losing around a third of its floor space if a proposed compulsory purchase order (CPO) goes ahead.
Bosses of the firm, which has always been promised it would be able to keep trading during development work, have warned the loss of around 53,000 sq ft of space will have an “unacceptably severe” impact on the company and will not allow it to keep trading on the site.
However, insiders suggest the company, which employs 850 staff in Edinburgh, is “playing hardball” with the developer in order to extract the best possible deal out of the St James Quarter scheme, which is expected to provide a huge boost to the east end of the city centre.
One source said: “This is a high-stakes game of poker, with a lot of money on the table. The language being used by John Lewis is no more robust than you would expect for a retailer of their size.”
The vast majority of the 80 retailers at the existing St James Centre have agreed to move out to accommodate the vast new development, which will create new shops, restaurants, cafes, 250 apartments and a five-star hotel. It is thought the number holding out amounts to “no more than a handful”.
However an inquiry into the CPO will have to be held in September by the Scottish Government, to deal with any outstanding objections and thrash out compensation deals. Ministers have already agreed to help the development get off the ground by approving a new funding scheme worth £61m.
The CPO proposals, which will ensure the development can finally go ahead, were approved by Edinburgh City Council in December, and may force traders to sell their interests at market value if a deal cannot be agreed with developers Henderson Real Estate.
The local authority’s leader, Andrew Burns, had promised that the powers, which he described as a “last resort”, were not intended to “do anyone over”.
But in a legal submission responding to the proposed CPO, John Lewis said the loss of retail space would entail a “fundamental and excessive interference” with the store. It said this would mean it would be forced to stock a much more limited range of goods.
John Lewis confirmed the store would be staying open throughout the development work two years ago, saying it was not prepared to relocate elsewhere during more than three years of building work.
Councillors were told last December that “part of the John Lewis department store where it currently connects with the existing centre” was needed to allow the development to proceed.
Head of planning John Bury said: “John Lewis will continue to trade during the redevelopment as the developer will make the necessary alterations to the store to facilitate business as usual.”
However, the company’s official response, which is thought to have been leaked, states: “The impacts are unacceptably severe on John Lewis.
“Further, they will not allow John Lewis to continue to trade in the centre, with the effect that it will undermine the prospect of delivering the very scheme that the CPO is intended to facilitate.
“Without a John Lewis anchor, it is our submission that the scheme will not be viable or have a prospect of success.”
A spokesman for John Lewis said that its store was a “critical part” of the plans for the development. He added: “Although we have objected to the CPO, our focus remains on working with the council and the scheme’s developers to agree plans which will create a great shopping environment for customers, allowing us to continue to trade in Edinburgh and safeguard the jobs of 850 local residents who rely on the branch for their employment.”
Martin Perry, development director for Henderson, said discussions with the retailer were “ongoing and progressing”.
He added: “It is not unusual for interested parties to lodge objections to a CPO; it is a completely normal part of the process.”