Many high streets are doomed because  the economics make it staggeringly difficult for independent, non-chain operators to get a foothold and to then make the numbers stack up.

Doomed.

Over the past few weeks there have been a number of stark examples in London of the system failing these businesses. The first involves Jewish cafe Gaby’s Deli on Charing Cross Road.

It’s been around for 50 years but it’s 71-year-old owner is now being shoved out by his landlord the Marquess of Salisbury who has received planning permission to have the site redeveloped by – just what we need – a restaurant chain.

It is just these sort of independent businesses with their quirks and character that make high streets interesting. But you can’t argue with the landlord if he can make a better return from another operator. That’s market economics.

Another desperate situation involves The People’s Supermarket (featured recently on Retailinsider.com) that faces closure over unpaid business rates. This co-operative food store was held up by David Cameron as a beacon of his ‘Big Society’ thinking. Among its virtues are its employment of ex-offenders and the long-term unemployed.

Doomed.

It was supposed to be at the vanguard of a move by the government to make it easier for communities to set up and operate co-operatives. But if it can’t pay the exorbitant business rates – that can be double the rentals on some shop units – then it’s gotta go. That’s market economics.

The final sorry tale involves the fall into administration of the Union Market supermarket/farmers market that opened in the former ticket hall of London’s Fulham Broadway tube station. The idea was for an independent business selling British seasonal produce to compete against the big supermarkets.

Doomed.

But an increase in the rent to £300,000 per year and the local council putting up parking charges for visitors to the area pushed the operation over the edge. But as we’ve said, if you can’t pay your bills then you can’t be in the game. That’s market economics.

There are no doubt many other similar examples around the country whereby interesting and independent businesses that bring vitality to the high street are doomed by the simple factor of the financial cards being stacked against them.

While this continues then it is hard to see how there is any long-term future for the high street. That, as they unfortunately say, is market economics.

4 Comments

  1. David Barrie on March 7, 2012 at 10:10 am

    Nice post but wrong as far as The People’s Supermarket is concerned. TPS is not a victim just now of market economics. It’s being hurt by a tax regime and political mindset that fails to recognize what they call in the United States a hybrid social enterprise. We are a for-profit with non-profit benefit, and so operate on a blend of margin, philanthropic funding and (non)commercial lending. The business rate regime, as applied by local authorities, only tends to recognize private or charitable enterprise. The system is struggling to keep up with the economics of the social market and social business: something that we can only hope will be embraced post-Portas and with increasing residential use and community occupation of non- or marginally-viable high streets.



  2. Glynn Davis on March 7, 2012 at 7:15 pm

    Thanks for that. I’m referring to market economics broadly – i.e where money is involved. You are right the ‘financial system’ is not sufficiently flexible to take into account these new retail structures. And that is a political thing.



  3. Stephen E Killick on March 13, 2012 at 10:48 am

    The only way is to transfer some of the failed retail back to residential ownership. One can only date most buildings in high streets these days by looking above the often hideous, plastic fascias allowed to proliferate and see the first floor of what, in many cases, was once a house. This is especially true of suburban high streets.

    The biggest problem of course is who is going to fund it. With residential developers wanting primarily green field sites some sort of tax breaks will have to be offered to allow conversion. By getting more people living in the high street there is at least a chance of more of them wanted to shop locally. Otherwise we will end up with what we have in so many towns, a proliferation of charity shops which deeply ugly frontages and a handful of professional users.

    Otherwise I agree entirely with what you say. When you visit European cities and the rich mix of many successful family concerns in comparison our regional cities and towns are often little more than a depressing walk through identikit covered shopping centres. To succeed business rates have got to be pegged, especially for start up and independent businesses.



  4. Stephen E Killick on March 13, 2012 at 4:02 pm

    It is most depressing the vibrancy of our high streets has largely vanished. Sadly the residential developers want greenfield sites although I am all for urging the Government to allow tax breaks and take the shops back to what they once were before the horrid plastic fascias went up, namely houses. The only way you can age a property in many of our towns and cities is to look at the first floor level above the horrors inflicted on the property by 1970s multiple retailers. And they moved out and into some stark, soulless shopping centre a while back

    By restoring redundant shops to homes it would at least build up some critical mass and get people back to using local stores although, as you so correctly point out business rates should be adjusted, ideally to turnover for new businesses. If turnover rents are applicable in the monolithic, identikit shopping centres then why not turnover business rates in towns? When one shops in parts of Italy and France it is a joy. Travelling to places like Uckfield, Hailsham, Hastings and Eastbourne near me it is simply dispiriting. Grim shipping centres with the same old tired faces and historic street layouts littered with charity shops and professional users is spelling the end of many towns and will continue to do so unless drastic action is taken. Namely incentives to get entrepreneurial people up and running at a price they can consistently afford.