The lowest point of the economic downturn may well be slipping into the shadows, but many high-street firms are still trying desperately to turn things around. High-street shops were undoubtedly the worst-affected by the recession with established retailers such as Woolworths, Blockbuster and Barratts falling off the radar. Whether this is down to the rise of online shopping or increasing business rates, nobody can deny that the high street we had previously known and loved is changing. A recent piece of research from Groupon and Kantar found that, out of 2,000 shoppers, 42% of consumers enjoy the convenience of online shopping. Clearly something has to change for the high-street franchise; whether that’s coming up with more innovative ways to engage with consumers or a freeze on business rates, there is no definitive answer.
What is clear is there’s no time to spare. Chains with more than six shops to their name are closing down more stores and an average of 20 shops have closed each day, compared to 14 a day in 2011.”
But what do those operating in the franchise industry believe to be the solution?
“Business rates should fall under local control,””Jo Nockels, training and communications manager, TaxAssist Accountants
Business rates remain a serious burden both on our network and on our 47,000 small business clients. Last year the chancellor took the positive step of limiting business rate increases to 2%, rather than linking it to inflation, which would have meant a 3.2% increase, but much more is needed.
What we really need is a freeze on business rates, pending a reform of the rating system. In a recent survey we conducted, 45% of our small business network cited business rates as one of the top issues that they would like to see addressed. The current business rates system is often accused of being fundamentally unfair, outdated and outmoded and, more pertinently, it has grown out of proportion to other means of taxation.
It is believed that by 2015-2016, the income from business rate tax will increase to £29.6bn – larger than fuel duty and council tax and will become the fifth biggest source of income behind only income tax, National Insurance, VAT and corporation tax.
One suggestion is that business rates should fall under local control so that the tax raised bears greater relevance to the provision of local services; whatever the alternatives are, it is clear that what high street businesses really need is a fair system that will support growth.
“Encourage people to shop locally,”“Jane Albon, managing director, Natures Purest
Most people considering this question would answer pretty quickly: reduce rent and rates. The less the franchisee pays for their premises, the more profitable the franchise will be.
I would be the first to say that the UK rental and rates systems need revising with some urgency. However, there is another factor that is being greatly overlooked and it’s something that we all have a hand in. Consider this question for a moment: do you actually use your high street?
Think back ten or so years. I bet you used your local high street every week, without fail. In fact, you probably used that high street several times a week. You shopped in local stores and the pounds in your pocket went into your local economy.
How about now? Hand on heart, do you still use that high street like you did back then? If you’re honest, the answer is probably no. At weekends you often use the out-of-town retail park, during the week you shop online, having your shopping delivered to your door. The perfect solution for your busy life. Perhaps, but how about visiting your high street again this week? I think you’ll like what you find: shops run by enthusiastic individuals with a passion for what they are selling, helpful advice and human interaction. Want to give to a welcome boost to high-street franchisees? Shop local.
If we could get the rent and rates sorted too, we’d be laughing.”