HMV, Jessops, Blockbusters and Republic. All have faced the brunt of the administrator's axe (though the administrators would argue that they are performing life saving surgery- depends on how you look at it). Yesterday, the BRC (British Retail Consortium) announced a toxic cocktail of falling footfall (caused by bad weather in January) and increased vacancy rates in town centres (now standing at 14.2% with the highest rates in Wales and the North). I was interested to read this article in Retail Week at:
http://www.retail-week.com/property/retail-administrations-could-lead-to-a-sixth-of-stores-lying-empty/5046319.article
It's an eye opener. As a result of administrations, one in six stores will lie empty. So what can be done about it? Yesterday, I argued that the above presents an opportunity for the sharp commercial Tenant as Landlords will want to do everything in their power to entice and keep Tenants in their property. That said, conditions on the high street still remain difficult. Wages are being held down in both the public and private sectors whilst RPI inflation (used to measure wage deals and rents) stands at 3.3%. As a result, consumer spending will remain squeezed. What can be done about it? In my opinion, a cut to business rates (even temporary) in the upcoming budget would allow many struggling retail Tenants and their Landlords to breathe a sigh of relief. Business rates are, in many places, higher than rents. The next re-evaluation is not set until 2017. The BRC has estimated that business rates will cost £175m and 14,500 new jobs in 2013. The BRC has argued that the government should calculate future increases by the average of CPI over 12 months rather than a single month's RPI. I accept that business rates are only part of the problem for the high street. However, it is an issue that seems to keep cropping up in the wake of the above administrations (and will not go away). A cut to business rates will do more to boost economic growth than a crowd pleasing Mansion tax. The above figures speak for themselves. Let's hope the Chancellor listens.
On another note- a campaign to cut business rates could work to the advantage of many law firms. I was reading an article in the Law Society Gazette (http://www.lawgazette.co.uk/blogs/blogs/in-business-blog/why-do-firms-run-shy-campaigns) yesterday which argued that many law firms run shy of running campaigns and need to do more to market their individual brands. A law firm campaign to cut business rates, based on the experience of advising struggling retail Tenants and SME's, would help the client and the firm. The client- it shows an awareness and understanding of the wider issues and problems affecting the client's industry. The firm- it will boost the firm's profile. A campaign to cut business rates will show a law firm committed to confronting their client's problems (albeit in a rather different manner) rather than just advising on the problem and regretting that nothing can be done about it. As a result, said law firm will be viewed as committed to their clients and proactive. In short, so much more than just a legal adviser. This is important, when clients are demanding so much more for their money. Definitely something for law firms (with strong commercial / commercial real estate pedigrees) to think about.
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