UK Markets closed

44 shops closing every week as retailers struggle with rising business rates

A row of empty shops in Burslem, the UK’s ‘ghost town capital’ (SWNS.com)

At least 44 shops are closing every week in towns up and down the country and more will follow unless there a major shake-up on business rates.

As online retailers continue to eat into sales generated through traditional bricks-and-mortar outlets, a new report warns historic forms of taxation are crippling many shops, big and small.

Ratings adviser Altus Group reports that in the seven years since the last business rates revaluation, 15,856 shops across England and Wales have shut.

MORE: Almost 44,000 UK retailers ‘in real financial distress’, experts warn

The shop count stood at 430,360 in April 2010, but this had dropped by 3.68% to 414,504 just seven years later.

The group says the controversial revaluation on April 1 has pushed rates even higher and threatens the future of hundreds of more shops.

Meanwhile, online retailers are not facing anywhere like the same sort of pressures on margins.

Thousands of UK jobs at Toys “R” Us were under threat until a deal was struck with the pensions watchdog (REUTERS/Peter Nicholls)

It was reported earlier this year that online giant Amazon’s nine distribution centres in England and Wales would benefit from a £148,000 cut in business rates from April to £11.3 million, despite the company’s annual sales in this country soaring to £7.3 billion.

MORE: Toys R Us crisis averted as it agrees £9.8m pension deal

Altus said an online retail sales tax could be used to offer rates relief to high street stores.

Alex Probyn, president of UK business rates at Altus, said: “An online sales tax might be used to level the playing field, but it does not belong within a system based largely on rental values.

“An online sales tax, for example, should not be seen as a generator of additional income, but revenue could be ring-fenced and used to provide additional relief for traditional bricks-and-mortar retailers.”

Earlier this month, insolvency advisers Begbie Traynor reported that 44,000 Uk retailers are showing signs of “significant financial distress”.

MORE: Welcome to Britain’s biggest ghost town – where 1 in 3 shops are boarded up

It comes as Toys R Us narrowly avoided falling into administration putting 3,200 jobs at risk after agreeing a last-ditch £9.8m deal with the Pension Protection Fund.

Professor Joshua Bamfield, director at the Centre for Retail Research, warned that “historic forms of taxation are hobbling physical stores and giving the advantage to online retailers”.

He added: “If we want to maintain a variety of forms of competitive retail enterprise, from small stores to large big box and department stores serving villages, towns and big cities, we need to ensure that property and company taxes do not consistently penalise physical shops in favour of e-commerce.”