It has been a year of turmoil for the UK high-streets, with nearly 2,700 shops closed by retailers in the first half of the year. That equates to nearly 15 sites per day – the toughest trading climate in the last five years according to a report by PwC.
The worst affected businesses within the retail sector are reported to be fashion and electrical. Major brands including Maplin and House of Fraser fell into administration earlier this year.
London was the worst-hit region, PwC said, while Wales had the lowest number of closures. “
Looking ahead, the turmoil facing the sector is unlikely to abate,” said Lisa Hooker, consumer markets leader at PwC.
“Store closures in the second half of the year due to administrations and company voluntary arrangements (CVA) already announced will further intensify the situation.”
In the recent annual budget announcement, Chancellor Philip Hammond released plans to cut business rates by a third for up to 90% of retail properties for two years.
A £675 million Future High Streets fund will invest in improvements to town centre infrastructure, reduce congestion, support redevelopment around high streets and enable housing and new workspaces to be created.
Chief Executive of the British Retail Consortium, Helen Dickinson OBE said: “The Government has missed a much-needed opportunity to help the retail industry. While we welcome measures to assist smaller retailers, the majority of the UK’s 3.1 million retail workers are employed in businesses that will not benefit from today’s business rates announcement.
“If the Government is to truly back business, it must engage in more extensive business rates reform to help all retailers and their employees through this period of transformation.”
None of the UK regions analysed by PwC recorded a net gain in store count in the first six months of the year.
Consumers are increasing their online purchases and as a result, many retailers have found themselves struggling to pay their rents and other overheads, such as a rising minimum wage and business rates. This has proven fortuitous for some brands such as H&M and Zara, who have been able to cover the struggling store profits. However, with the rise in online only businesses such as ASOS and Boohoo, many of the other fashion retailers cannot cope.
As part of the annual budget, Philip Hammond also promised a new tax for online firms that employ fewer staff and pay far lower business rates.
However, the British Retail Consortium says the chancellor was “tinkering around the edges” and called for “wholesale reform” of the business rates system.
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