How business rates impact upon high street performance – the evidence

There is an ongoing talk about the re-evaluation of business rates, and several high profile reports (e.g. the Grimsey Review 2013) call for drastic measures in the business rates system before it is ‘too late’ for the high street.

The University of Liverpool and Local Data Company are investigating factors that affect business rates (occupation, vacancy rates and rents ) and their preliminary analysis highlighted the disproportions in rents, vacancy rates and business rates – meaning some high streets are suffering more than others.

A CLG (2011) report presented a government plan that allows local authorities to retain a part of the income generated by business rates to reinvest in their own economic development priorities .

However, De Magalhaes’s (2012) highlights the problem with redistribution of business rates to local authorities, which still does not guarantee money will be spent in-line with a particular place’s priorities.

This is in contrast to the surtax generated by Business Improvement Districts, which is always re-invested locally, according to priorities set by the BIDs’ members.

Secondary shopping areas seem to suffer the most from the business rates system, and this was recognised in a scoping paper by Tym et al. (2000) who called for business rates revisions in these areas.

Also, Findlay & Sparks (2009) raised their concerns about business rates and argued whether they are well matched with the buying power of users and types of retailer present in a location.

In our research, business rates came out the 32nd strongest influence on high street performance, out of 200 factors, on a equal pegging with rents.

We will be presenting the order of influence of all 200 factors we investigated at the free High Street 2020 conference in Manchester on 10th July 2014.

Please click here to register.


CLG. (2011). Local Government Resource Review: Proposals for Business Rates Retention – Consultation, (July).

De Magalhaes, C., & De Magalhães, C. (2012). Business Improvement Districts and the recession: Implications for public realm governance and management in England. Progress in Planning, 77(4), 143–177. Retrieved from

Findlay, A., & Sparks, L. (2009). Literature Review: Policies Adopted to Support A Healthy Retail Sector and Retail Led Regeneration and the Impact of Retail on the Regeneration of Town Centres and Local High Streets. Scottish Government. Retrieved April 29, 2014, from

Grimsey, B, 2013, The Grimsey Review.

Tym, R. (2000). Secondary Shopping: Retail Capacity and Need —A Scoping Paper. National Retail Planning Forum, (June 9).

Christmas Shopping Explained

Manchester saw record numbers in the city centre last weekend; visiting the Christmas markets, enjoying a mulled wine or a gingerbread latte and, of course, going shopping. A boost in retail sales was predicted by, amongst others, Deloitte who projected an increase in sales of 3.5% to £40 billion, this year.

Predicting a year on year increase at Christmas is a very safe bet. We always spend more than last year at Christmas. Even if we say we are not going to. Last year, according to a YouGov surveyconsumers in the lower socio economic grouping of C2DE said the would spend significantly less in 2012 than 2011….but their actual spend was higher.

Consumers’ intentions are not a very good predictor of their behaviour. Asked way before Christmas, when stories about redundancy and recession are rife, it is not surprising they prefer to project an image of caution. But in the lead up to Christmas, the retail sector works very hard to encourage people to part with their money, tempting us with seasonal product ranges and festive merchandising – in the four days before Christmas alone Verdict estimate over £12 billion will be spent this year.

Given the ever increasing commercialisation of Christmas it is not surprising we are getting better at being consumers. Last year Internet users started to search for the word ‘sales’ online around about 14 December. Economically savvy consumers have already pulled forward the January Sales to Boxing Day and now they expect heavy discounts before Christmas.

Last week, PricewaterhouseCoopers said that 72% of the high street already had a sale – with the average discount being 46%. Just because items are cheaper doesn’t mean that we spend less. Most Christmas shoppers have a predetermined idea of how much they will spend per person on their list. So, we get more gifts for our money, the retailers move more stock but profit margins are reduced.

The squeeze on profit margins may be felt even more strongly this year as more people shop on the Internet relying on ‘click and collect’ services. Whilst this is convenient to the customer it can be expensive for the retailer, especially the cost of dealing with returns. For example, John Lewis ‘click and collect’ customers have 5 different ways to return unwanted goods. So much more complexity for the retailer to manage than the old ‘returns’ counter – where the customer also met the transport costs incurred in bringing the item back.

With 1 in 5 gifts being bought on-line does this mean further bad news for the high street? According to Experian, there were 113 million visits to retail websites last Boxing Day. However, footfall data shows the same number of people still went to visit the shops on Boxing Day. For many people, including the half a million people that visited Manchester at the weekend, going to the shops is synonymous with Christmas. I predict I will still be saying that for many years yet.

Too many betting shops?

Saturday saw a small group of people protest against the proposed opening of Manchester’s 26th betting shop in the city centre.

I was asked to comment this morning for BBC Radio Manchester on whether betting shops are a good or bad thing for the high street.

On the positive side a new betting shop, like the one proposed, in a prime retail area is likely to employ between 4 and 5 people. It will pay around £40,000 per year in business rates. It will also contribute about £100,000 in tax to central government. Finally, according to a report by Ladbrokes, 80% of their shops open in vacant premises. So the argument is that it’s better a retail unit is occupied and paying business rates and tax than just left empty.

The recent growth of retail betting shops on high-streets demonstrates that they are successful in attracting people in to spend their money. £200 million in Manchester alone according to city centre councillor, Kevin Peel.

The problem is money spent in a betting shop does not circulate very well. Compared to something like a restaurant which is much more labour-intensive, only a small amount of the turnover goes into paying staff.

Also the UK betting shop market is dominated by 4 national players who have 82% of all shops. So profit goes back to head offices that are not based in Manchester.

So the argument is money spent in betting shops cannot then be spent elsewhere in businesses that are more beneficial for the local economy.

But is 26 betting shops in the city centre too many? Some smaller towns like Rochdale have an even higher concentration of shops in relation to their population. On the other hand the UK currently has about 7000 betting shops less now compared to the 16,000 it had in the 1970s.

So the problem may not be how many we have, but where they’re located. The betting industry strongly refutes the accusation that shops are proliferating in areas of economic and social deprivation. But the on line mapping serviceprovided Geofutures certainly shows how clustered betting shops are around poorer areas.

Again, the industry argues that because they need to locate in areas of high football these are obviously going to be in town centres and high-streets. But their argument is not particularly convincing. Even their own research suggests that it is poorer people that gamble. They find a relationship between participation in gaming activities and household income only between households that earn under £36,000 a year.

Historically, activities that are not perceived as being particularly good for us are heavily regulated.

Before 2007 betting shops were not allowed to open next to each other. The reason we are seeing so many new betting shops in areas is partly the relaxation of this control but it is also a direct consequence of legislation that limits the amount of fixed odds betting terminals (FOBTs) to 4 in each outlet.

It’s these high-stake, roulette and casino machines that make up most of the shop’s turnover and also account for 50% of their profits.

A regular better i.e. someone that visits a betting shop at least once a month spends over £1200 per annum on FOBTs compared to £427 on over-the-counter bets.

A report by the Local Government Association indicated that half the public in their sample were concerned about betting shops. In particular, the ease at which empty retail outlets can be taken over by this type of operator.

Mary Portas singled out betting shops as being bad for the high street, but the concentration of any one type of business in a small area is usually bad, unless a location is looking to specialise, for example a street of fashion or second-hand book stores.

Many empty units like banks and building societies will not require any change of use to be granted before they can be turned into betting shops, therefore no planning permission is needed.

But all betting shops have to be licensed. Only one council so far, Newham, has turned down a license application for a betting shop. This is on the grounds that the shop’s primary activity will be gaming on machines rather than traditional over the counter betting.

This decision is being appealed against by Paddy Power and is up for review by local magistrates in June. I expect the licence will be granted as the operator is not proposing to do anything illegal.

Barking and Dagenham Council have launched a more strategic approach to their management of retail units. They have published supplementary planning guidance to give businesses 12 months notice of their intention to regulate the number of betting shops locally.

If gambling is the problem that Saturday’s protesters claim it is, then it won’t be long before national government will have to act. Perhaps that’s why the betting shop operators are so keen to get in quick, take over empty retail units quickly and make as much money as possible from the gaming machines whilst they can.


UK Retail Markets 2012

I am back at the National Association of British Market Authorities’ Annual Conference. I am listening to Krys Zasanda present the heading figures about the state of the sector.

279 markets contributed to the annual figures. 75 indoor and 204 outdoor. The survey was a traffic light system, asking Market Managers whether things had remained stable, increased or decreased with regards to stalls let, traders standing, market days, footfall, income, staff, bottom line and investment.

So, aggregating all the measures in 2012 74% of all markets replied stable or increasing 16% in decline. This was an improvement in last year.

In other news, like 2011, outdoor markets are doing better than indoor. Similarly Farmers’ Markets are doing better than traditional markets again this year.

Regionally the performance by region shows markets in The Midlands fare the worst with London ones doing the best (no surprise there).

The overall improvement could well be due to the Love Your Local Market and National Market Day initiatives, as well as the work Mary Portas did to raise awareness of markets. The Love Your Local Market national website got 14,000,000 hits!

So a bit of good news in what has been doom and gloom in terms of many retail statistics and news from The High Street.