The British high street is dying and the Government must take responsibility, according to a retail boss.
Founder of toy retailer The Entertainer has condemned Britain’s soaring business rates, saying the Government is a catalyst in causing casualties on the high street.
Gary Grant said last year’s rate hike had been a ‘real killer’ for retailers by heaping financial pressure on firms already suffering from squeezed margins.
His criticism comes amid a spate of restructuring and refinancing deals involving British retailers, as they grapple with a double-whammy of rising costs and waning consumer confidence.
While pressures from rising inflation and the National Living Wage have hit retailers, Mr Grant said business rates remain ‘the elephant in the room’.
Mr Grant said: ‘Landlords are being very realistic about their rent, but the one thing that is not negotiable are business rates.
Gary Grant of toy retailer The Entertainer said business rates remain ‘the elephant in the room’.
‘(The retail sector) is seeing many stores empty for long periods of time and the biggest issue is that (retailers) can’t open stores.
‘Business rates are out of line now with retail turnover. Business rates are the real killer. Any increase in cost where you have flat and declining turnover is going to put pressure on the bottom line.
‘The Government just haven’t got it. They need to take some responsibility for the high street’s decline.’
Retailers, hospitals, pubs and schools were among those dealt a hammer blow in April last year when the first business rates revaluation for seven years left many facing crippling bill hikes.
The April 1 rates overhaul saw 1.9 million properties in England revalued and rates rise for 500,000 businesses.
Despite the concerns, The Entertainer has managed to defy the gloom engulfing the high street by keeping a tight rein on costs and focusing on its lucrative range of own-brand toys.
The retailer, which has 145 stores and 1,360 staff, booked a 37% surge in pre-tax profits to £11.5 million for 2017/18, while revenues lifted 7% to £162 million over the period.
Such has been the challenge for other retailers that a restructuring process known as a company voluntary arrangement (CVA) – which allows firms to negotiate discounts on rents and close loss-making stores – has become the go-to lifeline.
New Look has shut 60 stores through a CVA, while Carpetright is pursuing a similar strategy that could see it close another 81 stores and tap investors for £60 million.
Toys R Us announced a CVA at the end of last year in an attempt to shore up its financial position, but it failed to find a last-minute buyer and succumbed to administration, sparking more than 2,000 job losses.
Mr Grant said CVAs should be used with caution, and could be avoided if there was better dialogue between landlord and tenant.
He said: ‘At the end of the day if a business cannot afford the rent, and can work together to address their unprofitable sites, CVAs could be avoided.’