Fashion retail to see 'worst Christmas since 2008'
The chairman of a prominent, but unnamed, retailer has said that the coming Christmas season could be the worst in more than a decade, which means it could be the worst since the financial crisis of 2008 that saw spending levels plummeting.
Economic concerns and high business rates will conspire to damage both sales and profits and would make the 2019/20 season “the worst winter since Woolworths collapsed,” the exec said. Heavy discounting has already begun after early autumn season sales in September were dented by a mix of very warm and very wet weather. This not only kept shoppers out of stores but seemed to have undermined their interest in buying new autumn season fashion.
The Mail on Sunday reported the chairman, whose chain has more than 200 shops, saying the high street economy was “absolutely atrocious” and the failure of the government to drive through legislation to cut business rates was a hammer blow.
Retailers are worried after legislation intended to cut these property taxes for physical store-based retailers didn’t make it though Parliament before it was closed down last week.
While rents for some retailers have been falling as they’ve negotiated new deals with landlords, their business rates bills remain stubbornly high with the newspaper saying more than 12,000 high street stores are now paying more in business rates than in rent compared with around 500 in 2017. Those figures are based one research from business rates consultant Altus.
The chairman told the MoS: “Everybody is struggling – particularly the fashion retailers – and even online fashion retailers are finding it hard because of the number of returns they are getting at the moment. The sales numbers are terrible and this whole political uncertainty has become a joke.
“The proposed business rates legislation would have ensured bills for shops would be reassessed every three years, rather than the current five years, so struggling stores could have benefited from a significant cut in 2021.”
Physical store retailers are carrying a heavier burden of UK taxes overall with retail accounting for 10% of all business taxes despite only accounting for 5% of the economy. As far as business rates are concerned, retailers pay 25% of the total take.
As mentioned, retailers are marking down autumn season stock already after warm and wet weather in September suppressed consumer interest in shopping. And while the fashion sector is suffering, homewares are also struggling with John Lewis, M&S, Debenhams and House of Fraser all cutting prices on interiors product.
Copyright © 2022 FashionNetwork.com All rights reserved.