Business rate reform call misses point, ecommerce expert warns

 

By Chris Lee

The Business, Innovation and Skills Committee (BISC), founded in 2013 to investigate the impact of business rates on retailers, has demanded “fundamental reform” of the tax. According to committee chairman Adrian Bailey MP, business rates represent “the single biggest threat to the survival of retail businesses on the high street”.

However, Dan Cohen, regional director at affiliate ad network Tradedoubler, believes retailers must take it upon themselves to change the existing culture of the high street as a means of reforming it.

Ailing high street

The BISC was established after several high street brands sunk into administration, including Blockbuster, HMV and Jessops, all of whom saw their business models significantly altered by internet retail and content distribution.

For Blockbusters, online movie streaming and distribution from the likes of NetFlicks and LoveFilm changed the way audiences consumed movies and TV, while iTunes and Spotify challenged HMV’s business model.

The BISC sees business rates as a core issue. Quoted in Drapers, Bailey said that since business rates were created “the retail environment has changed beyond all recognition. A system of business taxation based on physical property is simply no longer appropriate in an increasingly online retail world.”

Bailey continued: ““The Government’s consultation on the administration of business rates at least acknowledges that change is needed.  But this is a time for wholesale review and fundamental reform, not for tinkering around the edges.  Business rates are not fit for purpose and minor administrative changes will not alter that.”

Retailers must change culture to save high street

Tradedoubler’s Cohen welcomed aspects of the report, but told NMK that far more work was needed to save the high street, starting with its culture.

“This week’s report from the Business, Innovation and Skills Committee, which concluded that business rates are in need of reform, is only a very small part of the problem. The issue with high business rates is one that has gone back and forth for some time,” he said.

Cohen was pleased to see that there was a section on the changing nature of retail, highlighting the imbalance between physical and virtual stores, but part of the solution is providing consumers with the same service, price and experience that they have come to expect from their favourite high street retailers, he argued.

“The ‘identity’ of the high street is still in limbo between its traditional personality (the butcher, baker and independent grocery store) and the ‘connected store’, but while retailers have to look at ensuring their on- and offline stores work in tandem, they should also remember what their customers have become accustomed to,” he advised. “It’s true that high business rates don’t help high street stores, but retailers need to ensure that ‘bricks and mortar’ stores and online aren’t seen as two separate entities. By offering the same service, price and experience, and keeping ahead of the changing retail landscape, retailers can strengthen the online and offline relationship.”

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