Retailers are putting pressure on the main political parties to address increasing business rates and high street rents in their election manifestos, as new data shows a disproportionately large number of clothing shops closed in the first half of this year.
Business rates are set to become a hot topic in the run-up to next year’s general election, after the Office for National Statistics revealed this week that the Retail Price Index – which is used to set business rates – was 2.3%in September.
Rates are currently capped at 2%, but only until April 2015; after that, the rate will again be set using the RPI.
The BRC said it is essential that rates are capped again in the Autumn Statement in December. It is also urging the main political parties to commit to a widespread rates review in the run-up to next year’s general election.
It comes as recent research found more than 100 independent clothing stores across the UK’s top 500 towns closed during the first half of this year.
Womenswear independents were the hardest hit, with 60 stores quitting the high street, but their menswear counterparts were not far behind with 41 stores pulling down the shutters for good, according to figures from the Local Data Company and British Independent Retailers Association (Bira).
Footwear shops, sports stores and bridalwear retailers also made the top 10 list of business closures by classification from January to June this year.
LDC director Matthew Hopkinson said this was because fashion retailers face increased competition from new international entrants, etailers offering free deliveries and returns, fast-fashion retailers and supermarkets, compounded by a decline in spend.
He also noted that the cost of doing business (rates, utilities and insurance) has been steadily increasing, while margins have been falling.
Of those independents Drapers spoke to that have closed in the last six months, most cited high rents as a major factor affecting trade on the high street.
Shortland Shoes, which has two stores in Cobham and Banstead in Surrey, will close one shop on Saturday (October 18) due to spiralling rents. “At our review in September our rent in Cobham increased by 60%, which made business here unsustainable,” said owner Colin Clarke, who has been trading at the store for 35 years.
Michael Weedon, deputy chief executive of Bira, said: “Shops operate in an economy where large areas of economic activity are under the control of local and central government, whether it’s property taxes, parking costs or planning.
“What they need now is a matching political awareness to understand how to remove obstacles to success on those streets.”
Some high-street retailers have demonstrated an appetite to invest in independents. Earlier this year JD Sports Fashion took a stake in Leeds menswear indie The Hip Store and Scarborough-based Mainline Menswear, while Sports Direct invested in XXX.
Meanwhile, US private equity group Apollo Global Management has partnered with former chief executive of GA Europe Gavin George to form Alteri Investors, which will invest approximately £10m to £50m in struggling retailers in the UK.
George said high-street fashion chains would be a “particular focus” for investment. “It is a sector where we think there is a lot of change still to come,” he explained.
“There are lots of very strong retailers operating on the British high street, which are held back by historic debt on their balance sheets and the fact that the way we shop today is very different to 15-20 years ago,” said George.
“But these two things does not mean retail is dead – rather there needs to be a radical restructuring of those businesses to make sure they fit the needs of the future.”