High street retailers are braced for their worst Christmas in more than a decade as they struggle with high taxes, economic fears and frenzied discounting only weeks into the season.
The bosses of major chains have shared their concerns with The Mail on Sunday as Government efforts to ease the burden of tax on retailers appear to have foundered.
Vital legislation designed to cut property tax for retailers in struggling high streets failed to make it though Parliament before it was closed down last week.
High street retailers are braced for their worst Christmas in more than a decade
Research by The Mail on Sunday has revealed that business rates have remained rigidly high despite rents falling as landlords cut lease demands for struggling shops.
More than 12,000 high street stores are now paying more in business rates than in rent compared with around 500 in 2017, according to business rates consultants Altus.
The chairman at one retailer with more than 200 stores said the high street economy was ‘absolutely atrocious’ and that the failure of the Government to push through the legislation before Parliament closed was ‘like a kick in the b******s’ for those struggling to make ends meet.
‘This is going to be the worst Christmas since Woolworths collapsed [in 2008],’ he said.
‘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.
But the move is now up in the air with parliamentary time expected to be limited when the House returns.
Retail makes up 5 per cent of the economy yet pays 10 per cent of all business taxes and 25 per cent of business rates, which are based on the value of property and rents.
Another boss who runs hundreds of stores said: ‘Business rates no longer reflect current market conditions. Rents are coming down by a third but business rates are still sky high. If a sensible solution to Brexit can be found, everyone can stop panicking. But at the moment Christmas is impossible to call.
‘The rates system is broken. The high street is in continual decline. But this tax is based on 2015 property values, when the world was very different. When is the Government going to wake up?’
Department store John Lewis offered a massive 20 per cent discount on home products at the end of last month – a two-week event which one retail veteran described as ‘unprecedented’ and ‘basically a fire sale’ – following poor first-half results.
Sales of its home goods have soared but the discounting is thought likely to damage festive profit margins.
Marks & Spencer has been cutting furniture prices by up to 30 per cent. Debenhams and House of Fraser were this weekend both offering up to 50 per cent off.