Monday February 5 2018 THE NATIONAL MOTORCYCLE MUSEUM, BIRMINGHAM
improvement. Complete stillness. Where would it go next? It twitched lower in December and then dropped to 12% by March. It went down as 2017 began. Underlying this is the balance between
births and deaths on the high street. LDC tracks nearly half a million shops. On average one in 10 closes down in a year. Fortunately another one usually opens in its place. In all, if each one closing and each one
opening each year was given one ticket to Wembley Stadium for an event, they wouldn’t all quite fit in. From January to June 2016 the actual rate of
both openings and closings dropped by about a third as the Brexit vote approached. Openings fell more quickly than closures. So
by Midsummer’s Day (June 24), the number of shops in Great Britain had fallen by 1,995 - possibly as Chicken-style predictions slowed the market. Immediately after the vote activity, levels
began to rise, and by the Autumn they were back to Spring levels. But in October openings overtook closures and they have remained ahead ever since. Overall, 2016 saw a net loss of shops of more
than 1,600. But the high street is now on a six- month run of net growth, despite the loss of 130 BHS stores. This was not in the Chicken’s forecast either. Within those numbers, independent and
multiple retailers are closing more non-food shops than they are opening. Independents are opening more service providers (such as barbers) than multiples, which in turn, are closing service providers (particularly banks). And they are both cranking out more new coffee shops than may be good for our blood pressure. Household goods stores fell, net, by -42,
although hardware shops were up by 38, to partially balance the loss of a net -68 DIY stores. China, glass and gift shops shed -36 (net) across Great Britain.
Business rates Business rates have been roundly blamed for stressing the finances of shops, especially small ones. The delayed business rates revaluation
caused a furore, inevitably. A tax which has to deliver a set amount of money overall automatically generates winners and losers, as valuations are adjusted after a five (or in this case seven) year gap. Of 10 regions in England and Wales, only
three saw overall increases and Greater London was way out in front with RV (Rateable Value) increases averaging 30%. The south-east and, oddly, the East Midlands were also up. But of 64 counties, 18 also saw rises. And of
778 towns, more than half - 424 - shops were valued above 2010 levels. Only one of the top 10 was in London. While
the tiny town of Southwold in Suffolk, with 31 shops, racked up a harsh overall 173% increase, bigger towns such as Market Harborough in Leicestershire notched a retail jump of 50%. Several local retailers there saw
their valuations move above the £12,000 that would have exempted them from paying rates. One expressed a philosophical view of this, remarking that he thought ‘all ratepayers should pay something’, while maintaining that the overall take of the tax (1.8m businesses paying as much as 25m households) is too high for the good of business. Overall, the 425,000 small shops
in the rating list are wearing an average increase of 8%, while the 11,800 hypermarkets, supermarkets and large stores scored lower valuations by 4% and 7%. What may sting is that pure play online
retailers such as Amazon have seen big falls in the rates on their fulfilment centres. To rub salt into the wound, small shops are rated at 18% more per square metre of selling space than large stores. However, given the persistence of
transitional relief and extra support announced in the Budget (but about which there has been some confusion since the announcement of the General Election on June 8), the effects will take some years to be fully felt. What few seem to have recognised yet is
that a new appeals system is going to be far harder to navigate than in the past. As a result, fewer businesses are likely to be able to get their rates reduced. If the sky is on its way down, it may take some time yet to arrive.
Online skies A plunging pound should present export opportunities to online traders, although the same thing could turn round and bite the retailer if restocking via imports. The growth of online sales didn’t have an
obvious relationship otherwise to Brexitry. But in view of rates rises, it’s interesting to see what the ONS thinks is going on. It puts the proportion of internet sales of all retailing at 15% in March, down from a Black Friday peak of 18.6% in November. On this basis, it thinks that since March 2013,
the proportion of trade online has risen by 45% - although for household goods stores it is up 69% in the same period. But does online make up most of the market? No; the ONS reckons that in household goods, the percentage sold online is just 10.5%. It also indicates that at this rate, online will
not have snaffled half of sales until well into the 2030s. That, of course, ignores the effects of the build-out of online distribution channels,
talkingtrade
In a folk tale Chicken Licken believes the sky is falling down when an acorn falls on his head, so he sets off to tell the king. On his way he meets some feathery friends and then encounters Foxy Loxy…
with increasing numbers of white vans taking up tarmac alongside food Deliveroos delivering snacks on two wheels.
Egg and chicken But back to now. Economists are still predicting that the Chicken is on the money. Consumer credit has boomed over the past
half-year and is now being curtailed. Retail sales seem to be tightening in the first months of 2017. Triggering Article 50 is no longer a
theoretical next step and we are being treated to an unexpected election. The result of that poll seems, at the time of writing, to be solidly in favour of the May government, which will lead observers to believe that Brexit will go ahead in the same way as expected until now. So the sky may indeed finally be headed our way. Then again, chickens in particular should be
wary of the age-old counting problem with chicks and eggs. The past year in retail, politics and the economy should have taught us all by now that the only thing to expect is the unexpected.
• Michael Weedon is managing director of exp2 Ltd, which researches and creates reports for clients in the retail industry, including the Local Data Company (LDC) for which exp2 provides content. He established epx2 in 2016 from a leading trade association role.
Michael’s contact details are: Mobile: 07411 763 551 Email:
Michael.weedon@exp2.co.uk Tw: @michaelweedon
May 2017
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