High Street Chief Warns of Business 'Tipping Point' Due to Rising Costs
The head of Monsoon and Accessorize states that increased expenses imposed by Labour are jeopardizing jobs and investment.
Business leaders are at a critical juncture, with rising costs potentially leading to a decline in jobs and investment, according to the chief executive of high street chains Monsoon and Accessorize. Nick Stowe indicated that the company has already reduced its planned new store investments for the current year to 10, down from 25 in the previous year.
Stowe explained that the rationale behind this decision is that "rising costs mean the investment case doesn’t add up." This situation arises as businesses face increased employer national insurance contributions, higher minimum wages, and a potentially problematic reform of business rates, in addition to escalating energy bills.
"Retailers are not asking to be insulated from every increase in the cost of doing business," Stowe stated. "We have already navigated significant shocks and cost increases, and are paying more tax than ever. But Government does need to recognise the cumulative impact its decisions have on whether businesses invest and hire and recognise when those decisions reach a tipping point and employment and investment goes into reverse. We’re at that point."
Recent figures from the British Retail Consortium have shown a decrease in consumer confidence, adding further pressure to the high street. Concurrently, a survey by the Confederation of British Industry (CBI) revealed that retailers have curtailed order volumes at the fastest pace on record since the poll began in 1983, driven by a persistent downturn in sales.
Stowe urged Chancellor John Healey to cancel upcoming business rate hikes in the next budget. He also echoed calls from the retail sector to reconsider a shake-up of the rates system that aims to balance the playing field between physical retailers and online competitors, particularly concerning larger stores. Concerns exist that a reform targeting larger premises, intended to impact large warehouses used by online giants, could inadvertently harm significant 'anchor' stores in town and city centers. These larger stores are seen as crucial investments that support surrounding businesses.
The chief executive highlighted that the retail sector has already absorbed approximately £6.5 billion in additional employment costs over the past two years, alongside rising energy and transport expenses. The cumulative burden, compounded by increasing business rates, is becoming unmanageable.
Stowe emphasized that business rates are a fixed tax tied to having a physical presence, regardless of a store's profitability. He called for the Chancellor to freeze the business rates multiplier to prevent annual increases linked to inflation and to remove shops from the higher multiplier bracket. This, he argued, would provide immediate relief and allow businesses to continue investing in physical retail and job creation.
Last year, Monsoon and Accessorize invested in 25 new stores, but this year that number has fallen to 10. This reduction is attributed to the increasing cost of operations making the investment case less viable. The company believes in the importance of the high street and the role it plays in creating thriving town centers, but financial viability remains a key consideration for expansion.
The retail sector is a significant employer in Britain, providing entry-level opportunities for many. The disappearance of stores leads to a loss of jobs and opportunities. Stowe stressed that while retailers are prepared to manage cost increases, the cumulative impact of government decisions is reaching a critical stage. He is calling for meaningful reform of the business rates system to reduce the overall burden on retailers, particularly those with a physical presence, to support the revitalization of high streets and local communities.