The real reason our shops are shutting up
8:19PM BST 28 May 2013
Another day, another report on the death of the high street. According to the Centre for Retail Research, the number of shops in Britain is predicted to fall by more than a fifth by 2018, blighting our town centres and suburban malls with a further 60,000 boarded-up stores. We are, it says, facing a crisis .
This is certainly true but one of the main problems when it comes to fixing it is that we re blaming the wrong things. The usual culprits suggested are the march of the big supermarket chains, the state of the economy, and above all the growth of the internet. Even the biggest names in retail are not immune: last week, Marks Spencer said that it won t build any more clothes stores in the UK after 2016, as sales migrate online. And the mighty Tesco has said that it is ditching more than 100 empty plots of land that it had jealously and expensively acquired to build giant hypermarkets , and will instead focus on the internet.
Certainly, the web has its part to play, as does the flatlining state of consumer spending. Yet according to retailers themselves, the biggest single reason why so many shops are closing down is because of rising financial demands from government, in the form of business taxes, and from landlords, in the form of rent.
Take Clapham Books, the sort of shop that every high street needs. Friendly, independent and so plugged into the community that it deserves its own seat on the council, this south London bookshop is being forced to close at the end of the summer and look for cheaper premises elsewhere. If people see an independent bookshop closing they assume it s because of Amazon and e-books, says Ed McGarry, the shop s manager. But it s not. You can figure ways around all those things. It s about rising rent and business rates.
In Clapham Books s case, a recent increase proposed by the landlord means that its rent will have quadrupled in 15 years. The same is happening all over the country. According to the British Retail Consortium, the overall cost of doing business for shopkeepers has risen from £96 billion to £116 billion since 2006. Looked at another way, costs have risen by 21 per cent against a sales increase of just 12 per cent. Even where rents have remained static, or fallen (as the British Property Federation claims they generally have), there s still the problem of business rates. These are partially set using that pernicious tool of government revenue-generation, the multiplier , adjusted every April in line with the previous September s inflation figure. So this year, rates rose by 2.8 per cent, adding £175 million to retailers bills overnight.
Of course, the internet is playing its part in the changing retail landscape. By 2018, a fifth of all sales will be online, and retailers of all sizes are being forced to adapt to ensure their long-term survival. As part of its reinvention, Tesco will not only focus on internet sales, but open more smaller shops. It also recently acquired Giraffe, the family restaurant chain, in recognition that its future is about giving people a day out rather than just luring them to a big shed full of products.
John Lewis, meanwhile, is offering consumers increasingly flexible ways to shop: goods ordered online can be collected in department stores or branches of Waitrose, while shoppers can return online purchases of clothes and shoes at a network of 5,000 convenience stores and petrol stations across the UK. Hotel Chocolat, the fast-growing confectionery chain, has gone down the fine wine route. It is engaging shoppers by putting labels on its bars that show the terroir , including the year of the harvest and the amount of time the beans spent roasting. It also raised £3.7 million by launching a bond whereby investors were repaid in bimonthly deliveries of chocolate.
In fact, all retailers are having to be increasingly inventive about how they think with some wonderful results. I was a judge for The Bookseller s awards earlier this month, in which dozens of retailers proved that the high street can still be a vibrant place. One small bookshop Linghams in the Wirral is so good at putting on events and editing its range to local tastes that a nearby branch of Tesco directs shoppers to it. And two years ago an entrepreneur called Amarjeet Singh opened 98p+ shops opposite Poundland branches, undercutting them by 2p.
Britain remains a nation of shopkeepers ones with enough ideas to see the high street through its current crisis, even if in altered form. But for that to happen, ministers and landlords need to stop wringing their hands about the internet, and start cutting the crippling costs that retailers are forced to pay.