The focus on department stores has intensified in recent weeks, as the big-box retailers grapple with changing shopping habits, increasing costs and a turbulent trading landscape.  

The likes of John Lewis, Marks & Spencer, House of Fraser and Debenhams are battling to reinvent themselves in order to remain relevant to the modern consumer – and avoid the pitfalls that sparked the demise of their former high street rival BHS.

But the long journey to achieving that transformation is proving to be a bumpy one – a fact exemplified since the turn of the year.

Last week, Debenhams issued a profit warning, slashing its full-year profit forecast from £83m to between £55m and £65m following a “challenging” Christmas.

Boss Sergio Bucher is on a mission to create “social shopping” destinations under his Debenhams Redesigned strategy, and said the business will now “move faster” to restructure head office, call centre and in-store teams to make it more agile and, just as importantly, cut costs.

Days after Debenhams’ bleak statement, it emerged that House of Fraser was seeking to cut the rents of around half of its 60 stores in a bid to decrease overheads.

“Putting the impact of the national living wage, the apprenticeship levy, rising rents and increased sourcing costs to one side, business rates alone represent an increasingly heavy burden on their cost bases”

M&S’s mixed Christmas bag and a slump in sales from House of Fraser – both reported this morning – have only emphasised the need for department stores to invest in transforming themselves, despite myriad cost headwinds.

Data collated by commercial property consultancy Colliers International and shared exclusively with Retail Week illustrates the scale of the pressure department store operators find themselves under.

Increase in department stores’ business rates liabilities

Retailer2010 business rates liability2017 business rates liabilityPercentage change
John Lewis £108,005,902.77 £134,082,291.66 24.15%
House of Fraser £58,261,636.36 £64,907,454.54 11.40%
Debenhams £139,266,390.90 £149,665,096.96 7.47%
Marks & Spencer £510,998,179.55 £538,392,981.03 5.38%

Putting the impact of the national living wage, the apprenticeship levy, rising rents and increased sourcing costs to one side, business rates alone represent an increasingly heavy burden on their cost bases.

Colliers has collated a representative sample of 20 stores from each of the retailers’ portfolios, showing the 10 stores with the biggest increases in rateable value, as well as the 10 in less desirable locations that have benefitted from the steepest falls in rates.

And, analysing the impact that business rates are having on the P&Ls of House of Fraser, Debenhams, John Lewis and M&S, it is easy to see why they are actively striving to cut costs in other areas.

House of Fraser

Store LocationRateable value 2010Rateable value 2017Percentage change2010/11 rates liability (estimate)2016/17 rates liability2017/18 rates liability2021/22 rates liability
Old Christchurch Road, Bournemouth £675,000 £570,000 -15.56%  £279,562.50 £335,475 £326,981.41 £311,220
English Street, Carlisle  £615,000 £515,000 -16.26%  £254,712.50 £305,655 £297,860.06 £281,190
Linthorpe Road, Middlesbrough  £720,000 £600,000 -16.67%  £298,200 £357,840 £348,676.17 £327,600
Gwent Square, Cwmbran  £220,000 £178,000 -19.09%  £89,100 £106,920 £88,822 £101,816
Fitzroy Street, Cambridge  £68,500 £55,000 -19.71%  £28,370.42 £34,044.50 £31,150.37 £30,030
Canal Walk, Swindon  £675,000 £525,000 -22.22%  £279,562.50 £335,475 £326,396.41 £301,184.09
Centrale Shopping Centre, Croydon  £1,200,000 £840,000 -30.00%  £517,000 £620,400 £595,846.94 £551,025.06
Ashley Centre, Epsom  £467,500 £310,000 -33.69%  £193,622.92 £232,347.50 £225,362.79 £207,900.93
High Street, Shrewsbury £265,000 £152,000 -42.64%  £109,754.17 £131,705 £127,437.37 £117,539.20
George Street, Altrincham  £435,000 £215,000 -50.57%  £180,162.50 £216,195 £208,741.02 £192,493.08
Westfield London, Ariel Way £990,000 £2,370,000 139.39%  £426,525 £511,830 £772,225.34 £1,341,420
Oxford Street , London  £5,730,000 £9,010,000 57.24%  £2,468,675 £2,962,410 £4,314,206.69 £5,099,660
Acorn Walk, Milton Keynes £910,000 £1,380,000 51.65%  £376,891.67 £452,270 £655,873.30 £753,480
Market Place, Cirencester  £131,000 £194,000 48.09%  £54,255.83 £65,107 £92,926 £105,924
Victoria Street, London £1,360,000 £1,770,000 30.15%  £585,933.33 £703,120 £883,230 £1,001,820
Merchants Hall, Norwich  £830,000 £1,030,000 24.10%  £343,758.33 £412,510 £493,370 £562,380
George Street, Richmond £815,000 £1,010,000 23.93%  £351,129.17 £421,355.00 £503,990 £571,660
The Circus, Bristol  £1,530,000 £1,870,000 22.22%  £633,675 £760,410 £895,730 £1,021,020
Newlands Meadow, High Wycombe  £995,000 £1,210,000 21.61%  £412,095.83 £494,515 £579,590 £660,660
High Street, Guildford £1,530,000 £1,840,000 20.26%  £633,675 £760,410 £881,360 £1,004,640

House of Fraser’s flagship stores in Westfield London and on Oxford Street have seen their business rates surge following the 2017 revaluation.

The rateable value of its Westfield London store experienced the biggest rise, more than doubling to £2.37m.

Its shop on Oxford Street increased at the slower rate of 57.2%, but that took its rateable value to an eye-watering £9m.

House of Fraser is lumbered with a number of stores in less desirable secondary and tertiary locations, including Altrincham, Shrewsbury and Croydon, where rateable values tumbled 50.5%, 42.6% and 30% respectively.

Despite those favourable movements in its rates bill, Colliers’ data suggests that House of Fraser’s total business rates liability has increased 11.4% since the 2010 valuation to £64.9m.

Debenhams

Store locationRateable value 2010Rateable value 2017Percentage change2010/11 rates liability (estimate)2016/17 rates liability2017/18 rates liability2021/22 rates liability
Festival Place, Basingstoke £890,000 £700,000 -21.35%  £368,608.33 £442,330 £430,460.82 £397,217.92
Menai Centre, Bangor  £420,000 £322,500 -23.21%  £170,100 £204,120 £160,927.50 £184,470
North End, Croydon £1,515,000 £1,160,000 -23.43%  £652,712.50 £783,255 £755,540.27 £698,952.63
West Street, Fareham £282,500 £210,000 -25.66%  £117,002.08 £140,402.50 £136,476.55 £125,924.73
Green Lane, Derby  £1,425 £1,050 -26.32%  £574.75 £689.70 £562.80 £559.65
George Street, Altrincham  £208,000 £150,000 -27.88%  £86,146.67 £103,376 £100,425.34 £92,656.21
Lord Street, Southport  £397,500 £285,000 -28.30%  £164,631.25 £197,557.50 £191,897.05 £177,049.80
Spindles Shopping Centre, Oldham £575,000 £410,000 -28.70%  £238,145.83 £285,775 £277,557.49 £256,080.34
Princes Street, Stockport £685,000 £457,500 -33.21%  £283,704.17 £340,445 £330,253.30 £304,667.47
Portland Walk, Barrow in Furness  £103,000 £65,000 -36.89%  £42,659.17 £51,191 £46,609.14 £35,490
Westfield London, Ariel Way £1,260,000 £2,940,000 133.33%  £542,850 £651,420 £980,312.26 £1,664,040
Pride Hill Centre, Shrewsbury  £28,000 £64,000 128.57%  £11,596.67 £13,916 £16,382.92 £34,944
Macklin Street, Derby  £1,275 £2,550 100.00%  £514.25 £617.10 £660.91 £1,182.57
Oxford Street, London  £6,590,000 £10,370,000 57.36%  £2,839,191.67 £3,407,030 £4,961,968.70 £5,869,420
Marriotts Walk, Oxon  £176,000 £262,500 49.15%  £72,893.33 £87,472 £125,737.50 £143,325
Bridge Street, Nuneaton £190,000 £257,500 35.53%  £78,691.67 £94,430 £123,342.50 £140,595
High Street, Chelmsford  £700,000 £900,000 28.57%  £289,916.67 £347,900 £431,100 £491,400
White Rose Shopping Centre, Leeds £1,560,000 £2,000,000 28.21%  £646,100 £775,320 £958,000 £1,092,000
The Drapery, Northampton  £300,000 £382,500 27.50%  £124,250 £149,100 £183,217.50 £208,845
High Street, Slough £487,500 £600,000 23.08%  £201,906.25 £242,287.50 £287,400 £327,600

According to Colliers’ data, Debenhams has 132 properties across the UK, far more than House of Fraser or John Lewis.

Its overall business rates liability is therefore heftier than those two rivals – and climbed a further 7.5% to £149.6m after the 2017 revaluation.

Three of its stores have seen their valuations at least double, including its Westfield London shop, which now has a rateable value of £2.9m.

The values of Debenhams’ shops in Derby and Shrewsbury have also ballooned 100% and 128.5% respectively, albeit from very low four-figure bases.

Debenhams Barrow in Furness store was given the biggest decrease in rateable value, falling 36.9% to £65,000, while its shop in Croydon has benefitted from a £350,000 downturn.

John Lewis

Store locationRateable value 2010Rateable value 2017Percentage change2010/11 rates liability (estimate)2016/17 rates liability2017/18 rates liability2021/22 rates liability
Queensgate Centre, Peterborough £2,110,000 £1,690,000 -19.91%  £873,891.67 £1,048,670 £1,020,926.54 £942,114.72
Futura Park, Ipswich £1,510,000 £1,390,000 -7.95%  £625,391.67 £750,470 £732,963.07 £758,940
Queens Road, Brighton  £33,500 £33,500 N/A  £13,874.17 £16,649 £15,611 £17,855.50
The Harlequin, Watford  £1,820,000 £1,820,000 N/A  £753,783.33 £904,540 £885,319.20 £993,720
Bridge Road, Welwyn Garden City £1,080,000 £1,080,000 N/A  £447,300 £536,760 £525,354.25 £589,680
Ventura Park Road, Tamworth £1,120,000 £1,120,000 N/A  £463,866.67 £556,640 £544,811.81 £611,520
Great Western Outlet Village, Swindon  £10,750 £10,750 N/A  £4335.83 £5,203 £5,009.50 £5,729.75
Barkers Pool, Sheffield  £1,790,000 £1,790,000 N/A  £741,358.33 £889,630 £870,726.02 £977,340
Wood Street, Kingston-upon-Thames  £3,210,000 £3,210,000 N/A  £1,382,975 £1,659,570 £1,625,669.58 £1,816,860
St Pancras Internatonal Station, London  £163,000 £625,000 283.44%  £70,225.83 £84,271 £134,892.17 £336,801.24
Oxford Street, London  £12,680,000 £19,910,000 57.02%  £5,462,966.67 £6,555,560 £9,546,034.61 £11,269,060
Kings Road, London  £5,150,000 £7,670,000 48.93%  £2,218,791.67 £2,662,550 £3,827,330 £4,341,220
All Saints Green, Norwich  £1,090,000 £1,620,000 48.62%  £451,441.67 £541,730 £775,980 £884,520
Westfield Stratford City, Montfichet Road £2,310,000 £3,340,000 44.59%  £995,225 £1,194,270 £1,666,660 £1,890,440
Broad Street, Reading  £1,790,000 £2,580,000 44.13%  £741,358.33 £889,630 £1,235,820 £1,408,680
Parkway Shopping Centre, Newbury £570,000 £760,000 33.33%  £236,075 £283,290 £364,040 £414,960
Field Walk, Milton Keynes £1,980,000 £2,630,000 32.83%  £820,050 £984,060 £1,259,770 £1,435,980
Bluewater, Dartford  £3,020,000 £3,960,000 31.13%  £1,301,116.67 £1,561,340 £1,976,040 £2,241,360
The Hayes, Cardiff  £2,230,000 £2,870,000 28.70%  £903,150 £1,083,780 £1,432,130 £1,641,640

John Lewis has suffered the steepest increase in rateable values of the four department store businesses, following a 24.15% increase to £134.1m after last year’s property valuation.

The retailer’s rates at St Pancras International have almost quadrupled, while the rateable value of its Oxford Street store has swelled more than 50% to £19.9m.

Shops at Westfield Stratford, plus those in Reading and Norwich, have seen rateable values increase more than 40%.

John Lewis’ Peterborough store benefitted most from last year’s valuation, as its rateable value fell 19.9% to £1.6m.

According to Colliers’ data, Futura Park in Ipswich was the only other John Lewis store to benefit from a decrease in rates.

Marks & Spencer

Store locationRateable value 2010Rateable value 2017Percentage change2010/11 rates liability (estimate)2016/17 rates liability2017/18 rates liability2021/22 rates liability
Castle Street, Shrewsbury  £600,000 £287,500 -52.08%  £248,500 £298,200 £287,800.97 £265,390.03
George Street, Altrincham  £447,500 £234,000 -47.71%  £185,339.58 £222,407.50 £214,906.01 £198,191.18
Merseyway, Stockport  £935,000 £500,000 -46.52%  £387,245.83 £464,695 £449,165.58 £414,241.86
Freeport Outlet Mall, Stoke-on-Trent £172,000 £98,500 -42.73%  £71,236.67 £85,484 £77,702.16 £53,781
Queensway, Stevenage  £497,500 £320,000 -35.68%  £206,047.92 £247,257.50 £239,695.96 £221,113.55
Green Street, Neath  £190,000 £124,000 -34.74%  £76,950 £92,340 £61,876 £70,928
White Rose Way, Doncaster  £166,000 £112,000 -32.53%  £68,751.67 £82,502 £80,046.89 £73,846.53
Pontardulais Road, Swansea £715,000 £482,500 -32.52%  £289,575 £347,490 £240,767.50 £275,990
Church Street, St Helens  £417,500 £285,000 -31.74%  £172,914.58 £207,497.50 £201,365.83 £185,771.55
Gallaghers Retail Park, Waterlooville  £300,000 £208,000 -30.67%  £124,250 £149,100 £144,735.74 £133,530.26
High Street, Dorking  £280,000 £475,000 69.64%  £115,966.67 £139,160 £202,462.17 £259,350
The Forge Shopping Centre, Warrington £120,000 £216,000 80.00%  £49,700 £59,640 £86,931.07 £117,936
East Midlands Designer Outlet, Alfreton  £222,000 £402,500 81.31%  £91,945 £110,334 £160,860.18 £219,765
St John Street, Bridgnorth  £71,000 £132,000 85.92%  £29,405.83 £35,287 £51,488.82 £72,072
Lion Green, Haslemere  £154,000 £287,500 86.69%  £63,781.67 £76,538 £111,695.44 £156,975
Eastbourne Terrace, London £152,000 £287,500 89.14%  £65,486.67 £78,584 £116,043.39 £162,725
More London Place, London £191,000 £402,500 110.73%  £82,289.17 £98,747 £147,178.39 £227,815
Norfolk Retail Park, Norwich £106,000 £236,000 122.64%  £43,901.67 £52,682 £77,376.71 £128,856
Westfield London, Ariel Way  £1,330,000 £3,100,000 133.08%  £573,008.33 £687,610 £1,034,664.05 £1,754,600
Pond Street, London  £123,000 £332,500 170.33%  £52,992.50 £63,591 £97,198.65 £188,195

With the largest store estate of the group, M&S predictably has the largest business rates burden of the group.

But its already onerous liability has jumped a further 5.4% to £538.4m since last year’s revaluation.

Four of its properties – three of which are London – have seen their valuations more than double since 2010, while five others have been handed rates increase in excess of 80%.

The biggest beneficiary of the 2017 revaluation in the M&S portfolio is its store in Shrewsbury, but the 52% decrease in rateable value pales in comparison to some of the eye-watering hikes in other parts of the country.

With an uplift in its business rates liabilities, coupled with rising rents and staff wages, M&S’ drive to shutter some of its larger full-line stores to make significant savings on overheads appears a difficult but logical move to make.

It wouldn’t be much of a surprise to see its rivals do the same.