BRC says retail is facing the most challenging operating environment in decades

BRC says retail is facing the most challenging operating environment in decades

British retailers are calling for chancellor Philip Hammond to address the "unsustainable burden" being placed on the industry by business rates in his autumn Budget.

The announcement tomorrow (18 October) of the latest consumer price index figures will lead to another significant increase in business rates from April 2019, according to industry group the British Retail Consortium (BRC). The impact on the retail industry will be considerable, it says, increasing the overall business rates bill by nearly GBP200m (US$262m).

The lobby claims retail is facing the most challenging operating environment in decades as technology changes how people shop, consumer confidence is falling, and costs continue to rise.

And while retailers are responding – investing GBP1bn in new technologies over the last five years – average profitability across the industry has almost halved, meaning many businesses will struggle to absorb further increased costs.

"The business rates bill is having a dramatic effect – since 2015 there have been 3,200 store closures, and over 50,000 job losses. Worse, it is hindering the successful reinvention of our high streets as it is a cost that few start-up businesses are able to bear," the BRC says.

"Retail represents 5% of the economy, pays 10% of business tax and pays almost 25% of business rates," the group says.

It is is calling on the Chancellor to:

  • Freeze the business rates multiplier for two years until the 2021 revaluation, after which three-yearly revaluations will be undertaken. 
  • Work with industry to set out principles for future business taxation – outline a long-term vision, align international efforts, publish a holistic road map with immediate steps to reduce the burden of commercial property taxation.

"Retailers need the forthcoming Budget to reduce the cost burden on retail businesses," adds Helen Dickinson, OBE, chief executive of the British Retail Consortium. "This will incentivise innovation and support the industry in creating quality jobs and providing great choice for consumers at competitive prices – future-proofing retail to ensure the best is made of the opportunities and challenges thrown up by transformation.

"The business taxation system is in urgent need of reform but any shift to an online sales tax would represent a double jeopardy for many retailers who are responding to customer demand and investing in online retailing. Eight out of the top ten online retailers also have physical stores."