Retailers Feel Business Rates Pressure

4th December 2017.

An average of six shops a day have been lost in England and Wales over the past seven years, an analysis of government data has found.

Between 2010 and 2017, 15,856 shops were either demolished or converted into homes as retailers struggled to cope with the popularity of online commerce.

There has been little reprieve under the new business rates regime, with 1,364 stores hit by insolvencies so far this year, according to new research from the Centre for Retail Research.

Business rates, a tax on commercial property that generates £30 billion a year, have long been a source of anger for retailers because they are linked with property value rather than trading performance. The taxation also aggravates the competition with online retailers, who do not have this added expense.

Last month Feather & Black and Multiyork fell into administration, affecting 74 stores. Thomas Cook and Toys R Us have announced that they expect to shut 75 stores between them, and Royal Bank of Scotland recently announced that it would shut one in four branches.

Sajid Javid, the local government secretary, has promised to “level the playing field” between online retailers and high street shops. However, while Chancellor Philip Hammond mentioned implementing tax on digital areas of the economy in his Budget in March, any further information was neglected in the Autumn Budget last month.

Alex Probyn, UK president of Altus Group who conducted the research, said: “The face of retail is changing”. Probyn emulated Mr Javid’s sentiment that taxing online sellers would equalise the positions of online and high street businesses, further insisting that new revenue be used to provide relief for other businesses.

Last month’s budget did provide some assistance for those struggling with business rates, with a lower measure of inflation introduced two years earlier than expected. This should save businesses an estimated £210 million over the next two years.

The Credit Protection Association is saddened to see so many high street stores struggling to compete with online businesses. The economic world is changing and all businesses, never mind how reluctantly, will have to adapt accordingly. Whether you are a small, medium or large enterprise, you should ensure you have mobile friendly websites and that you communicate on all social media and interactive platforms. While it is a shame to wave goodbye to traditional brick and mortar institutions, by 2050 our industries may have to compete with robots (see full news report here) so we should start preparing for the future now.

The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!

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