WWD.com/business-news/business-features/half-of-uk-retailers-seen-at-risk-7105727/
government-trade
government-trade

Half of U.K. Retailers Seen at Risk

A new report on the state of the high street says that there is “too much retail space” and outlines a future strategy.

LONDON A new report on the state of the British high street by Bill Grimsey, the former chief executive of home improvement chain Wickes and supermarket group Iceland, paints a bleak picture — and offers strategies to get town centers back on their feet.

“The time is right for a fresh debate on the high street because current government policy is achieving very little,” Grimsey told WWD. “We know that there are 40,000 empty shops across the U.K., that thousands of small businesses are horribly financially stressed and at risk of failure, and that many town centers are a shadow of what they should be. People really value their local high street and we want to give every town center a fighting chance of a better future.”

Grimsey will meet with ministers following the release of the self-funded review, which contains 31 recommendations, including suggestions for reforming punitive business rates on shops, ways to improve management of high streets and town centers, and the appointment of a full-time high streets minister (the current part-time position is attached to the duties of the housing minister).

The report, due out on Wednesday, is in response to a government-commissioned review of the high street carried out by Mary Portas, the retail expert and television regular, in December 2011. In his review, Grimsey says that Portas’ assessment “promised the earth but delivered little” and dubs it “little more than a PR stunt” to “lay the grounds for a lucrative TV makeover show about the Portas Pilot Towns.”

Grimsey and a team of eight associates called on business analysts Company Watch to conduct the research, which says that while the health of big retailers like John Lewis is improving, it’s smaller retailers that present a bigger area of concern. The research says that 46.6 percent of all retailers, about 20,000 businesses, in the U.K. are at serious risk of failure.

Fashion retailing has taken a big hit. Women’s clothing retail stores have shown a net decline of nearly six percent for independents and 13 percent for multiples — a combined net loss of over 500 units between 2011 and 2013. Conversely, health and beauty retailers increased by 10.4 percent, or by more than 2,300 outlets, in the same period.

In less than two years, eight major high street retail names, including HMV and lingerie brand La Senza, have gone into administration. Despite this, Grimsey says that “the opportunities to reinvigorate” the towns and streets he visited for this report are “incredible.”

The solution to the country’s high street crisis, says Grimsey, is “to adopt a business approach to set out the vision, the objectives and plans, to develop each area as a unique vibrant community hub with an economic blueprint.”


RELATED STORY: Second-Half Outlook Gets Gloomy at Retail >>

Grimsey’s most significant proposal concerns the charges that businesses pay. “The government has to overhaul the business rates regime as soon as possible. It’s not fit for purpose. It’s an unfair and outdated tax that is pushing far too many businesses over the edge,” he said.

To create a fair and economically sustainable high street, the report makes a number of suggestions, including granting 50 percent business rate relief to any business that occupies a retail property in the retail core of a town that has been vacant for 12 months. Local authorities are urged to offer loans to small businesses, while local crowdfunding is recommended to encourage local people to collectively invest in the local community and start-up businesses.

Previous initiatives, such as Portas’, are said to have failed because they lacked defined targets. With the Internet having permanently changed the way people shop, the report encourages policy makers to “accept that there is already too much retail space in the U.K. and that bricks and mortar retailing can no longer be the anchor to create thriving high streets and town centers.” The review advocates a repopulation of high streets and town centers as community hubs with more housing, education, arts and entertainment, as well as business and office space, health and leisure resources — with some shops.