Today a further 15 “Portas Pilots” were announced. I’d had the press release yesterday and along with a number of retailers and people like me, small business owners who support and work with retailers, had a number of misgivings and doubts. We’re not all grumpy moaners; we’re not all socialist dreamers. We are all rate paying small businesses who bizarrely care deeply about the future of our businesses and our community. Let me share some of the thoughts, mine and those of others.
A £5.5 Million package of support is too little too late when faced with the biggest increase in business rates in 20 years…
The rates issue is massive. Mine have doubled, not just had the 5.6% annual increase based on the September RPI metric. Small business rate relief is actually “small rates rate relief” as it’s only applicable to property with low rateable values. Most retail space is considered premium and thus has a rateable value that takes it out of scope for small business rate relief. Rateable values were also recalculated – they now are based on valuations at the top of the property market, not the current valuations. Thus most retailers in most towns get:
- Rates based on highest possible valuation
- No small business rate relief even if they are sub 10 employees
- An increase which in context of today’s inflation rate is double what it ought to be
So, whilst no one begrudges the cash invested in towns it really isn’t addressing one major issue… as business owners we’re working so much harder for so much less, it’s soul destroying. Portas Pilots aren’t helping the businesses that make a town to survive, and it won’t matter what the town team do to make it a great place to be, if businesses aren’t viable and have to close down then the town will have nothing but hanging baskets and a website to show all these visiting consumers that will come as a result of a hanging basket and a funky website (obviously, it’s so simple, why didn’t anyone do it before…!)
Retailers want to have shops, don’t reuse empty shops for other things, just make it viable for businesses to open up!
In the main ALL smaller retailers who are online only really want to have a shop, maybe 2 or 3 in fact, but the overheads of securing premises make it almost impossible.
There are hundreds of empty shops, there are hundreds of businesses longing for premises BUT if you’re the landlord you don’t want your place getting a bad name if the business who takes it on fails… the next potential tenant will ask themself “was it the business or the location that was bad?” – there will be a nagging doubt. Landlords expect smaller businesses to present a robust business case and put down c. 6 month rent deposit before they’ll entertain assigning a lease. Whilst they may equally offer rent free periods (great for cash flow and getting the trade in a location established) there are few businesses who are sitting on a pile of cash that would equate to 6 months rent as a deposit.
What’s needed is some kind of scheme to help underwrite good businesses, not loans necessarily, but perhaps something that bridges the gap between a pop-up shop and a permanent shop both conceptually and legally. The issue with a pop-up is the occupant and landlord know it is transient; fine for some – that’s all they want, not for others. The effort and money invested in the shop fit and interior is less when ongoing trade from a location is uncertain. I don’t have the answer on this, but perhaps landlords and businesses could come to an agreement that was more “fluid” a “suck it and see” approach – perhaps starting out on pop-up style terms, proving a concept for 3-6 months, and having the agreement that at the end of the period, subject to success, the longer-lease would be assigned. If there was a guarantee scheme that then underpinned the leasee to avoid the need for the heavy deposit, and it was based on evidence of successful trading from that location, then I would anticipate fewer vacancies and more new / small businesses taking the step to having their own shop.
Of course this is in part what Pop-Up Britain are doing, but they are just the very first, tentative step on the transition. More is needed to really complete the process from pop-up to stay-up.
Markets, Mentors and Museums!
A great deal of the 2nd phase of pilots seem to be focusing on creating markets, providing mentors, and using space for non-retail activity (artistic licence to use the term museum!)
Markets are a double edged sword, whilst an interesting attraction (in good weather), and clearly a footfall driver, established retailers aren’t so sure that they don’t just soak up all the consumers’ cash before they even cross the threshold of the store.
Mentors, in my view (which is biased as I offer mentoring, but hear me out), is SO very personal (on both sides) that you really can’t commoditise it. I don’t chose to work with all those who approach me, and similarly not everyone chooses to work with me. It’s got to be a harmonious relationship, a partnership, it must “feel right”. As the mentor you will take a text / email or even a call – any time – day or night, weekends, bank holidays and even from the beach… WHY? Because you are there for the client! YOUR mentor is your sounding board, your guide, your “fresh pair of eyes”. My rates reflect a principle of “you get what you pay for” – because you don’t just get the allocated hours, you get someone who is thinking about your business as part of the fabric their of life! On holiday I was taking photos of product and emailing them to a client, to show them how similar items are merchandised. When out and about I see a shop that would suit their product, so I speak to the owner about them and collect a card… As their mentor I believe that their business is as important to me as mine, well more so, their business IS my business. Their success IS my success – we’re completely symbiotic.
Now tell me that the government can offer you that level of support. I think not.
As for museums – well I use this phrase to describe the move to using retail space for non-retail. It could be a museum, library, club… but hang on…. the whole economic eco-system (pension funds, investments etc) have a level of dependency on retail property commanding a level of rent. I am unsure as to how non-retail uses will make sufficient revenue from the space to pay the current rents; retailers find it tough enough… So assuming rents are renegotiated, values drop. Where is that going to hit? Somewhere in the “food-chain” there is someone about to loose out. If YOUR pension fund investments had been put into retail property and you saw the revenue from those investments cut in half you’d be quite disappointed (to put it mildly).
It may be necessary to bring retail rental values down, to increase occupancy etc, but you can’t just broad-brush change the use, change the inevitable valuation and expect that this won’t have a severe impact somewhere else in the economic infrastructure.
Let’s get a website, and oooh, let’s get an app!
Finally, I promise I won’t go on… but seriously? Spend your money on a website and an app and this will transform the town? Are you mad… I DO believe an online marketing strategy is an important strand to a holistic regeneration strategy, but it’s a strand, it’s a minor strand AND I say this fully aware of the importance of the internet – I am blogging and I own www.e-mphasis.com – I am hardly an internet antagonist. What I do see is FAR too many people band-wagon-jumping and believing that a website and an app will fix everything. Many haven’t set aside any funds to pay for the ongoing search and social media marketing required to drive people to said website and app, many haven’t allowed for the on-cost of forever upgrading the app to new versions of the mobile operating systems – how many versions of IOS, Android, Windows Mobile and Blackberry are there currently in use? It’s probably in excess of 12…
You can easily burn through a lot of money and achieve very little. Look at WHO visit towns… teens? Yes, many. Who are the big spenders? Probably more mature people… and are they busy downloading apps? No. They want to enjoy a pleasant visit to the community, to shop from local people they like and trust. They want it to be safe, clean and easily accessible. So don’t get slap-appy or tangled up in a web, just sort the basics out please!!!
The real winners are not the winners…
Finally, a thought I first heard at the Independent Retailer Month launch conference and have now heard echoed repeatedly… the real winners aren’t the winners! If you didn’t get the cash but you did have a go you have a team, a plan and something to prove! With the cash comes inevitable in-fighting and arguments, beady eyes watching what you do and quibbling about what you spend it on. Non-winners are free of all of that, and we all know in a whole town £100K won’t go far!
You’ve got the support now from ATCM and AMT too – and, the best bit is we have an Independent Christmas to look forward to… so loads of excitement that will barely cost a penny but could make a material difference to your town. I can’t wait to share it with you 🙂