A Pre-Budget Call for a Business Rate Break
The Commons business, innovation and skills committee have announced an inquiry into the retail sector, following several high street casualties with the loss of over 10,000 jobs. Indeed the British Retail Consortium estimates that 11 percent of shops are now empty in the UK and highlights a massive failing and continued risk on the British High Street.
Conversely, the United Kingdom is up there in the league table of countries spending online, second only to the United States and just above Japan. And on average we spend £1,126 each online, the highest individual spend of all the countries!
So why are the online-offline playing fields far from level? Why is the physical retail channel failing and what can be done to stop the rot?
In one effort, Ve Interactive is developing and deploying an omnichannel experience in partnership with the recently launched The Clerkenwell Collection, in order to seize the opportunities and new shopping habits of consumers, whilst negating the perils of physical retail existence.
We don’t see this as a reactive strategy to the fall in High Street profits, or a battle for the consumer in cyber space, but instead see it as a completely new concept to deliver a retail experience that suits the contemporary consumer. A consumer that has access to and knowledge of the online channel and all its associated convenience, but one that also appreciates an ‘experience.’
So it’s a recognition that consumers’ expectations have changed. Where there is experience there is pleasure to be had and because many products are now available online, merely holding stock in store is no longer enough.
But the biggest threat to even the most innovative high street approach is the cost levied by government on both small and large retailers. For example, business rates remain a huge burden. Retailers are still paying them based on the peak property rents of 2008 and currently the retail industry pays £7bn in business rates, accounting for 5 percent of the country’s tax take. On the street level, these rates are largely disproportionate to the possible income generated. They are essentially a form of income tax on advanced income.
The government needs to cut business rates by half, allowing retailers to build more stability and invest in varying their retail experiences for today’s consumer. The government would recover the money in continued VAT collection from the enterprises and there would be fewer people on the job market caused by retail collapse, and as a result, less expense incurred by the ‘regenerative’ budgets needed for decimated, unloved and unattractive high streets.
So it’s time for the coalition to give them and other small businesses a break.
Whether it will, all hinges on tomorrow and the outcome of Chancellor Osborne’s Budget…