Boots to close 200 stores as High Street crisis continues.
03/06/2019.
UK chemist chain Boots has announced plans for a review that could see more than 200 stores close over the next two years, as problems for high street businesses continue to worsen.
American owner Walgreen Boots Alliance reported that the business – which is one of the UK’s biggest retailers – had faced its “most difficult quarter” on record.
A spokesperson for the company said that the firm was being “realistic about the future and the fact that we will need to be agile to adapt to the changing landscape.”
The review to close almost 10% of the pharmacy chain’s stores presents a bleak forecast for businesses in Britain’s retail sector.
As high rent and wage costs combine with high business rates, lower consumer footfall and disruption from e-commerce businesses, many businesses have struggled to make a profit. In the last year alone, the number of shop closures has led to 93,000 jobs being lost across the UK.
As one of the UK’s largest retail chains, Boots employs 56,000 staff across its network of 2,500 shops. The sites being considered for review include those in areas where Boots operates more than one store or has leases set to expire soon.
CEO urges MPs to reform “unfair” business rates
The news of Boots’ plans to review sites for closure comes a matter of days after the company’s chief executive urged for parliamentary action to reform the “unfair” business rate system.
CEO Sebastian James said that pressure from unmanageable rates was responsible in great part for the collapse of many firms and presented “a real problem” for the retail sector.
Whilst Boots reported an annual business rates bill of £144m on sales of £6.6bn in 2018, online retail giant Amazon by contrast paid just £63.4m in rates on sales of £11.5bn.
Speaking to MPs on the Treasury Select Committee, Mr James warned:
“We do not have to look very far to see that some names that have been on the high street for decades – if not hundreds of years – are closing their doors, going into administration . . . and most of them will cite property costs.”
Mr James criticised a lack of government action on the matter, noting that Boots had lodged appeals against business rate bills nine years ago – but had yet to receive any rulings from the Government.
Retail business rates “neither fair nor sustainable”
Leaders across the retail sector have similarly condemned the harmful impact of business rates on businesses in light of the current trading climate.
In May, the British Retail Consortium’s Helen Dickinson noted that the current business rates system “imposes huge costs on firms regardless of whether they are in profit or in loss,” terming this approach “neither fair nor sustainable.”
Campaigners have called for the current rates system for retailers to be replaced with a levy on reported sales – a proposal publicly backed by leading retail industry executives including Mr. James of Boots UK and Tesco CEO Dave Lewis.
Adding his voice to the call for urgency, John Lewis’ property head Chris Harris warned MPs last month: ‘There needs to be action now,” adding: “There has been an unprecedented change in the high street very recently and the business rates system is cumbersome and slow to react to that.”
The closures are yet another blow for the UK’s high street and only adds to the evidence that UK retail is under extreme pressure at the moment.
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Are you owed money by a retailer?
With pressures on the high street it is essential that you stay on top of the credit limits you grant retailers and watch carefully for any late payments.
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See the section below – About CPA.
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CPA is passionate about late payment
The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.
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If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.
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About CPA
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply to retailers like Boots or small ones, help us help you identify the risks.
Why use a third party collector?
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When you customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
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