5 ways to save high street retail

An emphasis on strategy, fairer tax and an ability to embrace disruption could solve the brick and mortar woes.

by Paul Simpson
Last Updated: 10 Jan 2019

It was a December - and indeed a year - to forget for a nation of shopkeepers.

Total retail sales showed the worst growth in 10 years (at precisely 0.0% according to the British Retail Council) and some of the UK’s biggest retailers, notably M&S and Debenhams, suffered decline over the festive period. This follows a year bespotted with store closures, IVAs and redundancies.

But the headlines make for grimmer reading then reality. Jezz Bezos’ entrance into the brick and mortar game and the fact that a number of retailers - including Primark and the women’s fashion brand Seasalt - continue to open stores and increase profits shows that there is opportunity to be had.

Nonetheless it remains a challenging and turbulent time. So is there anything that can save - or at least ease the burden on - high street retail? Management Today asked a retail consultant, industry veteran and current CEO what needs to be done.

Define a strategy

Retail isn’t just an industry, it is an integral part of British society. When Marks & Spencer closes a store, the CEO normally receives letters of complaint from 10 MPs. Yet there is, Mary Portas says, no coherent national strategy to support such a vital national resource. The radical transformation of high street retail isn’t just about revenue per square metre, it is about what kind of communities we want to live in.

Make tax fairer

Retail represents 5 per cent of the UK economy, but pays 10 per cent of corporate tax and nearly 25 per cent of business rates, according to the British Retail Consortium. This tax burden is, the organisation argues, unfair and unsustainable. Portas calls for a complete rethink of the business rates system so that it isn’t based entirely on property but on a company’s impact on society. Such a system would, for example, reflect the fact that Amazon uses Britain’s roads to deliver 750 million packages a year.

Sort the landlords out

Investors expect commercial property companies to be conservative. Yet sometimes, landlords could take a longer view – a reduced rent for the next decade is better than maintaining the same rent for two years and killing the retailer.

Retail veteran Bill Grimsey says local authorities should have the power to penalise landlords that a) leave commercial premises empty for more than six months and b) ‘bank’ land for future developments. A register of landlords would also help trace the owner of every property and enable councils to discuss issues with them.

Embrace disruption

Ignoring industry veterans who likened partnering with Amazon to inviting a fox to watch over a hen house, US retailer Kohls now accepts returns from the online retailer at more than 100 of its stores and sells its smart home products in branded kiosks at 30 stores. Kohls CEO Michelle Gass says: "The big idea is that this is teaching us to think differently." Since the tie-up started, the retailer’s like-for-like sales have grown for five quarters in a row.

Fix the economy

Between 1955 and 2007, real disposable income per head in the UK rose by an annual average of 3 per cent, according to the Office for National Statistics. Since 2008, that average has plummeted to 0.2 per cent. As Brexit looms, surveys show that consumers are becoming less confident about their finances.

At the same time, store costs have risen due to the weakness of the pound, various government initiatives (especially the apprenticeship levy and the national living wage) and technological investments to compete online. In this context, it is remarkable that more shops aren’t closing.

Image credit: Shaun Taylor/Getty images

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