The condition of retailers
On average, four retailer firms are going insolvent every single day as increasing expenses and online competition unleash devastation on the high streets of UK. In a disheartening report according to the Insolvency Service, which underlined the havoc sweeping the industry, 350 retailers have collapsed from January to March. The statistics are 25 percent more than in the same period last year and 40 percent higher compared to the last quarter of 2018.
Experts have given warnings to the High Street saying that the retailers will keep losing shops as they are being pounded by devastating business rates as well as increasing rents. Simultaneously, traditional retailers are struggling to cling on to the customers attracted to online retailers like Amazon who have an edge of comfort over them.
Attempts at profit
Many are decreasing prices in desperate attempts to boost their sales, gaining profits in the process, as informed by the BRC (British Retail Consortium). The chief executive of Tesco, Dave Lewis, has urged ministers to decrease business rates and levy 2 percent online sales tax to ease the pressure on retailers.
The present condition has been emphasized by the ‘Save the High Street’ campaign, which called for an equitable competition between traditional retailers against online firms. A series of big brands have collapsed in this year, which include Debenhams, HMV and LK Bennett. 175,000 jobs have been predicted to diminish in the near future.
Replying to the investigation performed by MPs in the Select Committee of the treasury, Tesco has blamed rising business rates for damages to the communities and their investment. Tesco, UK’s largest retailer spent £700m on the rates bill in the previous year.
Lewis stated that the system is becoming increasingly outdated so urgent reform is needed. Having a levy on the online sales will not only help create equal opportunities for online and traditional retailers, but also in a revenue- neutral way for the Government.
The BRC has announced the quantity of products that are being sold at heavy discounts have increased in April in comparison with a year earlier. It cited the reason for this to be fierce competition between traditional and online shopkeepers.
The BRC chief executive has said that cut-throat competition could be beneficial to the consumers, but it is also affecting the already meagre margins of retailers. To ensure success, retailers should invest in not just physical but also digital markets so that they can provide the experience that the consumers want. But, investment always comes with a cost and until the Government does something to reform broken and damaged business rates, more stores will keep on shutting down with even more unemployment for workers. The head at Altus Group of business rates, Robert Hayton, has stated that the retailers will have to continue to struggle till the Government intervenes and boosts the rates system.