The British high street is dying and the Government must take responsibility, according to The Entertainer’s founder.
Gary Grant has condemned Britain’s soaring business rates, saying the Government is a catalyst in causing casualties on the high street. The founder of The Entertainer 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, Gary said business rates remain ‘the elephant in the room’.
He commented: “Landlords are being very realistic about their rent, but the one thing that is not negotiable is business rates. 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.”
He added: “The Government just hasn’t got it. It needs to take some responsibility for the high street’s decline.”
Retailers 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 1st April rates overhaul saw 1.9m 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 range of own-brand toys.
The retailer, which has 145 stores and 1,360 staff, saw a 37% surge in pre-tax profits to £11.5m for 2017/18, while revenues lifted 7% to £162m over the period.
Such has been the challenge for other retailers that a restructuring process known as a company voluntary arrangement (CVA) has become the go-to lifeline.
However, Gary has said CVAs should be used with caution, and could be avoided if there was better dialogue between landlord and tenant. “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,” he commented.