Rents may not be rising at the speed they were, but the growth in overall costs of occupying retail property is still out of control.
Property costs are enough to make the mildest mannered retailer see red. And so it was at Retail Week’s successful conference on Saving the High Street in Birmingham last Thursday, where Alex Gourlay, the chief executive of Boots’ retail arm, gave an impassioned speech on the future of the UK’s shopping streets, and why costs need to be controlled.
It’s a common fallacy that because rents on new deals aren’t rising like they were, the cost of occupying retail property is going down. Nothing could be further from the truth.
The most telling statement of the day was when Gourlay told the conference that Boots’ property costs are rising at three times its staff costs. This, the mild-mannered Scotsman said, was unsustainable.
Of course it’s not just rents, although thanks to the anachronism which is upward only rent reviews, retailers on existing leases don’t feel any benefit at all from headline rents going down.
It’s also the soaring cost of business rates, new levies like BIDs and the planned supplementary business rates, and the cost of lighting and - particularly over the winter just gone - heating stores.
The rate of increase in costs just isn’t sustainable and will lead to more retailers deciding they need fewer shops, which in turn will mean more harm for the UK’s high streets.
A postponement of this year’s rates revaluation would have been the best way to give some short term help to the high street, but it’s looking unlikely now.
And while Tory MP and Ottakars co-founder Philip Dunne talked at the conference about a few pro-business measures his party would introduce if elected, decisive action for the high street doesn’t look high on the agenda whichever party wins the election.