Mike Ashley, the owner of Frasers Group, has launched a strong critique of Andy Burnham's proposals aimed at revitalizing the high street, labeling them "delusional" and warning that retailers will face further devastation if taxes are not reduced.
In a letter addressed to the Prime Minister, Ashley, formerly the owner of Newcastle United Football Club, expressed his disapproval of what he termed "recent populist proposals." Burnham had suggested measures to alleviate pressure on businesses, which have been struggling with reduced consumer spending and increased operating costs. These plans include offering business rate discounts to pubs and clubs by raising business rates on online retail warehouses and implementing stricter regulations for vape and betting shops.
Ashley, whose retail portfolio includes House of Fraser, Flannels, and Jack Wills, argued that imposing higher taxes on larger retailers through increased rates would be "simply delusional." He contended that the country's economic challenges require addressing "real" issues rather than focusing on "topics which provide good media soundbites."
He identified a "disastrous" approach to business rates and the "dramatically increasing cost of employing people" as the primary obstacles for businesses. Ashley stated that these factors, compounded by increases in minimum wages and employer National Insurance contributions under the current government, have led to retailers cutting jobs.
Ahead of the upcoming Budget on October 28, Ashley urged for a change in the "hostile business climate," warning that inaction would result in the "further devastation" of high streets.
Ashley also referenced his recent acquisition of Harvey Nichols, a troubled department store chain, stating, "My challenge to you is - how are you going to help with turning Harvey Nichols around?"
Furthermore, Ashley highlighted the escalating issue of shoplifting, describing it as "getting much worse" and calling for measures to protect retail establishments. Frasers Group reportedly loses around £40 million annually due to theft, which also poses risks to staff.
Ashley also took issue with Burnham's remarks regarding misleading Recommended Retail Prices (RRPs) and superficial discounts. He defended the practice of significant discounting, such as his Sports Direct brand's advertised "up to 90 per cent off the RRP," asserting that it provides consumers with better value and helps mitigate the cost of living. He stated that RRPs set by reputable brands like Nike, Adidas, and Puma are not inherently problematic.
However, Ashley called for scrutiny of "price fixing" within the sportswear market, citing instances where consumers may be overpaying because retailers are restricted from offering desired discounts. He pointed to the uniform pricing of official England shirts at £134.99 during the recent World Cup as an example of tactics that reduce market competitiveness. He criticized the competition watchdog for issuing fines that are "disproportionately low and toothless," which he believes do not deter such behavior. Ashley concluded by urging the government to focus on legal changes to prevent brands from limiting distribution, thereby combating price fixing and better protecting consumers.