Business Rates Rise for Retailers

At the worst possible time for retailers, chancellor Alastair Darling is expected to raise business rates next month by more than £1billion. Despite cries from some of retail's heavyweights including Sir Philip Green to seek postponement or cancellation of the proposed 5% rate rise Darling is insisting that he has no plans to amend the proposal. With a clear hint at the recent bail-out plans for the UK car industry, Phil Wrigley, chairman of New Look points out that, "it is strange that the government is taking money from some industries and giving it away to others." Ultimately, in a rare moment of unity, the rates row may force both retailers and landlords to work together to pressure the government on this point. Landlords are furious that the government is making them pay business rates on an increasing number of empty properties. As an ominous footnote to the issue, Ian Cheshire, chief executive of B&Q's owner Kingfisher has stated, "This is not the time to be increasing the tax burden on retailers - the casualties will come next year." According to figures within a report by The Sunday Times, it is estimated that this year the government will get £24 billion in business rates and retailers will pay a quarter of that. Eyebrow raising!!

Consumer confidence improved marginally in February but will Hippy confidence shine through?

Hurray! Retail Week report that GfK NOP's Consumer Confidence Index rose by two points month on month to -35, (but is still 18 points down year on year) and that the climate for big-ticket spending improved as the major purchases measure rose for a fourth consecutive month to stand at -24, (but this too is still five points down year on year). Not surprisingly, the index measuring whether "now is a good time to save" dropped seven points to -25 and is 53 points down on February 2008. All in all the improvement reflected greater confidence in the economic outlook for the next 12 months and in personal household finances over the same period. Rachael Joy of GfK NOP's consumer confidence team is reported to have said: "Consumer confidence remains very fragile, although it rose slightly from its January figure." She said the uplift in consumers' views of their personal circumstances and the economy generally "suggests a growing number of consumers believe things will be better this time next year". It may sound a little hippy, and I’m not sure whether that is on trend or off this season, but we in this office believe that with a decent Summer, and maybe even an early one at that, these percentage point positions will improve even further. Two poor Summers have left us ripe to feel the full force and brunt of a recession but with a good dose of Vitamin D let’s hope that it’s a tonic in the right direction. Either way, by the Summers end we can be sure that our darker complexions will either be a tan or bruising!

Commercial landlords. Which planet are some of them from?

According to a report by property agent Cushman & Wakefield, retail administrations are driving high street voids as high as 15% in some areas with an average of 11.2 % nationally. Further, the report puts the increase in void rates, some 4 per cent higher than in a typical market, down to retail administrations, which now account for 3.3 per cent nationally. Central London has the lowest amount of voids due to retailers falling into administration, with 0.6 per cent of stores on the capital's prime retail streets empty as a result of retail failures. But the figure is much higher elsewhere, such as in outer London, where 4.9 per cent of voids are empty due to administrations. This morning I was speaking with one of our long-standing clients and he told me that the landlords for one of his central London sites are seeking to increase the rental by 65%! So o.k. we all know that right now London maybe fairing better than most areas of the country, driven largely by the tourist benefitting from the week pound against the Euro but even so, what planet must you be from to seek a 65% increase in times like this? To this retailer, like many others, his London sites are in some way presently holding up his other locations around the country where footfall and sales are considerably down on their historical levels. For this particular client, matters are not assisted elsewhere when their landlord for a Midlands site is seeking a 20% increase also. Certainly that particular Landlord cannot be making their decision based on any significant benefit of the Euro-spend trickling all the way up the M40. I think the reason may be more simple! They are just from a different planet!