The news that Boots is reviewing its UK store portfolio has been met with a large degree of shock and surprise. Given what is happening to virtually every retailer with a mature store estate, why should this be the case?

The company has a store estate in the UK of over 2,500 and is said to be reviewing the future of more than 200 stores. According to the Local Data Company, there are 242 towns with two or more Boots outlets among 734 towns and locations where they are represented.

In my local high street in Putney, south London (a weak retail centre), there are three – all within 50 metres of one another. While one of the stores is an optician, it is confusing for the customer to know what is available in each store.

Different dimensions

Perhaps size of store matters?

There is no doubt that executed properly, the retail brand can make much more impact in larger stores – just look at Primark and the best of the department stores. These are stores where consumers want to spend their time. Larger spaces should yield economies of scale both in terms of the costs of property and staff.

“Councils need to actively manage the high street in a similar way to a shopping mall owner. That’s easy for me to say, difficult to enact”

The danger, however, is that you build a big space and the merchandise buyers promptly fill it, but not necessarily with products that sell. What is really needed is a store with flexible walls, which of course is yet another advantage of the digital world.

In the case of Boots, beyond the ’supermarket experience’ of having products on shelves to be picked by customers, there are a series of vital services for the consumer including pharmacy, optician, hearing and photo printing. While I might not expect these to be provided in Terminal 5 at Heathrow, why are they not provided in every high street location?

Managing the high street

Perhaps it’s more about flexibility?

The answer is the need for retail spaces to be capable of more variation in terms of size. Within a large department store, the individual space dedicated to a brand or product category can be increased or decreased by the owner of the store. In shopping malls, where there is also a single owner, stores can be doubled up to the floor above or relocated to a different unit.

This is not possible in the vast majority of our towns and high streets. Fractional ownership, differing architecture and planning restrictions combine to make flexibility impossible. Worse still, you can be successful in a location but, due to closures and changes near your store, you find your trade deteriorates.

Councils around the country have to step up and take a much more proactive role in actively managing the high street in a similar way to a shopping mall owner. That’s easy for me to say, difficult to enact.

New framework

Perhaps the current economics just don’t work?

The minimum wage has had an impact on store costs, but it would be socially unjust to suggest unwinding this initiative. Property rents are being reassessed often in a brutal manner through a CVA process.

“We need to have a sensible economic and commercial framework for physical stores to thrive”

And now I come to taxation – on sales, property, employment and profit. I am not an economist, so this is not a subject I feel qualified to opine on. However, if we value physical retail stores as important in society, the total taxation cost of a store – whether it’s in the form of VAT on sales, council tax on the property, employer’s National Insurance or corporation tax on profits – needs to be rebalanced with other sources of income into the Exchequer.

We shouldn’t mourn the loss of 200 Boots stores, as it is an inevitable part of the regeneration process, but we need to have a sensible economic and commercial framework for physical stores to thrive.