Some high street shops are now paying more in business rates than they pay in rent!  With competition from the out-of-town supermarkets and the explosion of online retail, compounded by ever-tightening parking restrictions, can the traditional, independent trader survive in such a tough, uncompromising business environment?

Business Rates are killing High Street Shops

Business Rates are killing High Street Shops (photo from Flickr)

 

Last month I blogged about over zealous and inflexible parking restrictions in our city centres creating havoc and threatening the future for local, independent, high street traders.

I have had Part 2 of Save our London Shops in draft for a while, but before I could publish, the national press stepped in to take up the mantel!

Business Rates Compound Difficulties

Tremendously difficult parking problems has made using local shops almost impossible. As more local shops vanish, so to do the reasons for customers to visit the high street. Additionally the cost of running a local shop has fallen totally out of line with the economic conditions – a major contributor to this cost are the business rates that the shops have to pay. Life is incredibly difficult for the independent trader.

The Sunday Times has taken up the cudgel and is very publically asking for some help for these people with the high cost of business rates. Sign the Sunday Times petition for an overhaul of business rates here

Whether one takes the view of Mary Portas or Bill Grimsey, both of whom have written extensively on the subject of small shops and The High Street , it is clear that the online retail revolution has had a massive impact on bricks-and-mortar shops. It’s inevitable there will be even less of them in the long run – the downward trend is well established, but that doesn’t mean that they all have to go. Robert Peston Goes Shopping  – the BBC’s excellent series on the transformation of British Retail over the 20th and early 21st Century – made the prediction that online retail would probably halt the growth of the huge out-0f-town supermarkets. Peston argues that most people will do their main food shop online and have it delivered. And they will look to top it up with trips to the high street in between their main deliveries. That’s why Sainsbury Local and Tesco Express have re-appeared on the High Street. So much for the big boys. Does this help or hinder the small independent trader? Increased footfall versus increased competition.

Independent Traders cannot compete with the big boys

The reality is that the odds are overwhelmingly stacked against the independent high street shops – the massive overheads they now carry make business very difficult indeed.

Business rates for office space, retail or any form of commercial property is a tax. Taxes (e.g corporation tax) usually relate to a percentage of the profit, but not for these traders.

Some small shops are now paying more in rates than they pay in rent!

Rates rarely go down, except at the revaluation time, and the government have just delayed the next scheduled revaluation so this problem is on-going, and many businesses will go to the wall in the meantime.

The need to solve this problem is very urgent, but, given the time that it takes to amend any charging system such as rates, I fear that there will be no change  until they have all pretty much ceased trading. Until changes are made, there is no reasonable expectation that a new generation of these shops will replace them. The competition from the supermarkets – online and out of town (with their free and easy car-parking) and now once again on the high street – is just too great to make a traditional retail start-up a sensible business proposition.

About Michael Fraser

Michael Fraser

Michael - founding partner of Find a London Office - started in the London property market in 1970. Michael has developed extensive knowledge of the locations, the owners, the rental values, and - most importantly - has developed very solid contacts with the other agents working in the hub of the conventional office market, giving him a considerable advantage both sourcing office space, and negotiating the best possible terms for the tenant.

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