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Rates and parking are hobbling retail, says Shoe Zone chief

Shoe Zone chief executive Anthony Smith has called for the government to change the business rates system and reduce parking charges on the high street.

In the retailer’s latest trading update, released earlier today, Smith was highly critical of the business rates regime. He noted that rates paid as a proportion of rent had risen from 26.4% in 2009 to 54.3% in 2019, and had increased by £700,000, despite Shoe Zone having 38% fewer stores.

“If I were to complain about two [retail] issues, it would be rates and parking,” Smith told Drapers.

“High street store closures could stop if the business could stop business rates. Rents are going down, but rates aren’t.”

Shoe Zone said it had secured 23.6% rent reductions across 60 high street stores.

Smith, who joined Shoe Zone in 1993 as marketing manager, said: “If they don’t change rates in towns, shops will close. It doesn’t mean we don’t feel confident about the high street, but we feel confident in out-of-town locations.”

Shoe Zone big box

Shoe Zone opened 21 new “big box” stores in 2018/19, takign the total to 45

Meanwhile, he added that high street parking charges also need to be addressed. 

He added: “Parking charges are largely controlled by county councils – those are the things that are stopping people from coming into towns and driving people to shop out of town. We [are located in] a number of towns where good local authorities have reduced parking for the first two hours, and it does have a [positive] impact on turnover on those shops.

“The government has to remove barriers for people going into towns to shop.”

However, digital growth and out-of-town “big box” stores has helped revenue at Shoe Zone to grow by 0.9% to £162m for the 53 weeks to 5 October 2019.

The overall rise in sales was attributed to Shoe Zone’s out-of-town “big box” stores. During the year it opened 21 new units, taking the total to 45. The stores generated £15.6m revenue for the year, up from £7.1m last year.

A “big box” carries 350 own-brand styles per season, plus 400 branded lines, such as Clarks, Hush Puppies and Wrangler.

Smith said high street and town centre stores were now a focus for the group: 20 stores in the existing portfolio were earmarked for conversion into a premium “hybrid” format that was trialled this year.

Hybrid stores are smaller stores on high streets that stock the whole own-brand range, plus half (200 styles) of the branded range. They do not stock Clarks or Rieker, but do sell Skechers and Hush Puppies.

Shoe Zone website

Shoe Zone increased digital revenue by 9.2% to £10.6m

Smith said: “Hybrid growth is important. We have already converted stores and opened one new hybrid store. We are converting another 20 stores and will be relocating a few stores, too.”

“We’re good at investing in the business and the hybrid format has been successful. We’re spending £6m a year on investing in digital and stores. Having a good, strong bricks-and-mortar business is amazing for digital growth.”

Digital revenue was up 9.2% to £10.6m. Digital sales account for around 8% of the total.

Smith said: “Digital had a very slow start last year, only growing at 5%, but had a much better second half, where we grew at around 13%. This was largely improved because we employed a new buyer [Zoe Black, digital buyer, appointed in April], who is buying specifically for digital.

“We’re expecting to deliver much stronger growth [online] in 2020.”

Shoe Zone has 455 high street stores and 45 “big box” stores in the UK and Ireland.

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