The demise of the high street was anticipated long before the Covid-19 pandemic struck. But with extended lockdowns having turned online shopping into a necessity rather than a preference, the judgement looks to be final.
Over recent weeks, many of the UK’s former favourite fashion retailers have found themselves at the sharp end of our hastened adoption of e-commerce. Big names, such as Debenhams and Arcadia’s Topshop, have gone into administration and are being bought by online-only retailers like Boohoo and Asos that either didn’t exist or had very low market share 20 years ago.
Only yesterday, Boohoo decided to buy the final three Arcadia brands that were up for grabs – Burton, Dorothy Perkins, and Wallis – officially completing the carve-out of Sir Philip Green’s fashion empire. As with other recent acquisitions of high street brands by online retailers, physical shops are not part of the swoop, adding further to the thousands of jobs being lost in the hollowing out of town centres.
These deals have inevitably increased pressure on the chancellor of the exchequer to change the way the government taxes online businesses.
In a letter sent to Rishi Sunak ahead of next month’s budget, the leaders of 18 retail and property organisations, including Tesco, Asda, Morrisons, B&Q and Waterstones, have called for internet retailers to pay their “fair share” of tax. Failing to do so, they argue, means the UK government risks accelerating the collapse of the high street, especially once physical retailers stop benefitting from the 12-month rates holiday introduced last April.
One of the biggest business rate payers in Britain, Tesco, is proposing a one per cent “online sales levy for businesses with annual revenues over £1m” and calling for a reform of business rates to “create a system that is fair and sustainable for all”.
The Treasury, which is due to report back on last year’s fundamental review of business rates in the spring, is understood to be considering an “Amazon tax” targeting major online retailers, along with an “excessive profits tax” aimed at companies that have benefitted from the pandemic.
On the other hand, the British Retail Consortium, which has today published new data showing sales of non-food items in stores dived by 36.5% over the three months to January, has opposed the measure, arguing it would hit high street retailers with online operations and bring higher costs for shoppers.
Whatever the outcome of Sunak’s review, the high street will emerge from this crisis having changed beyond recognition.