Large Retailers Shutter 6,000 Shops In 9 Months
So far this year, between 1st January and 30th September, 708 shops have been closed by large retailers falling into administration, whilst a further 333 shops were closed through Company Voluntary Arrangements, a controversial insolvency procedure used to close loss making stores.
A further, 4,793 shops have been shuttered by large retailers through “rationalisation” as part of a cost cutting programmes.
In the first 9 months of 2019, 2,531 more shops were closed by large retailers than the 3,303 closed during the whole of 2018.
Professor Joshua Bamfield, Director at the Centre for Retail Research, attributes the closures to high costs, low profitability, the rapid growth of online companies whilst citing the lack of investment in stores coupled with weak forward planning.
Major chains including Karen Millen, Jack Wills, Bathstore, Patisserie Valerie and Debenhams all went into administration earlier this year.
The position is set to worsen with Mama and Papas recently announcing that they would be closing stores through a pre-pack administration, whilst Mothercare intend to close all UK stores having gone into administration this month.
Boris Johnson has said a future Conservative government will extend the retail discount on business rates to 50% next year in England, for those properties with a Rateable Value less than £51,000, up from 33%, to try and stem closures whilst committing to launching a fundamental review of the tax ensuring the overall tax burden is reduced as a result of that review.
September’s 1.7% headline rate of inflation will see gross business rates bills rise by £94.45 million next year for for those retail properties in England with a Rateable Value over £51,000, and precluded from the retail discount, according to detailed analysis by real estate advisers Altus Group.
The retail discount will continue be subject to EU rules which restrict state aid to €200,000 per business over a three year period with Robert Hayton, head of UK business rates at Altus Group, saying “most large chains will have reached the de minimis regulation limit (the cap) this financial year and will effectively be precluded from the enhanced discount but the commitment to lower the overall burden will be a welcome relief with the standard rate of tax having gone above 50% and at its highest level since 1990 with the rate set to rise further in April”.