Simon Wolfson, the Chief Executive of Next, told ITV News that the government need to reform business rates as they are accelerating the rate that high street shops are closing.
Simon Wolfson stated how the government has not made the business rates reflective to the rising popularity of online shopping today. It needs updating to fit with ‘’todays reality’’. He believes the gap is widening between the good and bad retail locations, expecting the rising vacancy rates of high streets to continue. He remarks that the cities and towns which are doing well, should pay the higher rates, but the struggling ones who are worsening, are stuck and the only way to reinvent them is to lower their business rates. This will split the burden more fairly.
This commercial property tax raises £30 billion a year for the government and local authorities. Since the last recession, the demand for retail space has never been so low. The rents and value for commercial property, has fallen, however business rates have not. Many shops are therefore being charged higher rates than they are rent. Wolfson states how he would have ‘’more frequent revaluations, up and downwards revaluations, so the rates are a fair reflection of the value of that property.’’
Next is joined by Debenhams, Sainsburys and John Lewis who have complained about the unfair competitive advantage the tax gives to online rivals.
Having 530 UK next stores, Wolfson is apprehensive about the future of them all and has no idea where the balance will settle. He has great confidence that stores will still be demanded in the future, as 50% of the goods Next sells online is collected from a store. However, if more customers choose to buy online, the company will have to restructure and consolidate their store portfolio to ensure they can meet the correct demands – as other retailers would be doing.
Could this be the answer to the retail crisis?