Garry Hogarth calls for action
My key idea: More needs to be done to encourage consumers to visit shops. It would help if parking was improved and if certain shopping areas were pedestrianised. We could see more retail growth and more expansion of international companies in the UK if business rates were lowered. Retailers could improve their own growth prospects by investing in online and training.
This country has a great history in retail, and it’s a crucial industry. It is the UK’s largest private sector employer, and it generates a lot of revenue. In December 2013, the average weekly spend in retail hit some £8.8bn. Retail brings tourists to London and attracts international businesses and investment. But there are things holding the industry back that could be easily fixed to help retail business expand.
Agent Provocateur has 93 shops all over the world, 12 of which are in the UK, with eight in London. For us, as for lots of larger retailers, London is the most important place in the UK. But it’s tough for shoppers to physically get into London.
There’s the Congestion Charge and difficulties parking and getting around. It would help retail businesses significantly if parking restrictions were eased, to encourage more shoppers to visit. There needs to be more parking available at weekends. The government could do more to direct councils on this issue. Certain areas, like Oxford Street, could be pedestrianised, at least at the weekends, to make shopping more appealing. This could help UK retailers and it could also encourage more international companies to expand here.
The other major problem in the UK is business rates. We pay on average 40% of our shops’ rent in business rates. It’s a huge amount of money and I can’t see what benefit retailers are getting. We’ve got 24 new projects planned worldwide in the next financial year, and not one is in the UK, because it’s expensive. It’s hard to find good sites. Even when rent isn’t too much, you then have to add 40% for business rates. When you can look at going into a great street in Paris or Milan or Rome, where rents are a little lower and there are no business rates, it’s not a hard choice to make. Sales are also weaker in the UK than in other countries. We’re up 8% this year in the UK, but we’re up 25% in the US and up over 40% in Europe.
On a more positive note, some 20% of our total global sales are now online. Online is an opportunity for retailers of all sizes, and they need to invest in this area. It’s not expensive to set up a website or to manage it. You can scale quickly online, and it’s much more profitable than having shops. Retailers should also be proactively investing in training, particularly if they have international ambitions. Making sure that managers in all shops across the world are trained to the same standards is essential for consistency in customer experience, reinforcing brand reputation.
But retailers shouldn’t necessarily rush to go overseas. Some people want to expand internationally when they haven’t yet got the brand proposition right in their own market. We’re now opening 20 to 25 shops a year, but we waited to expand overseas until we were completely happy that we knew what we were doing here. We were also lucky that our bank has been really great. I’ve banked with Barclays since the late 1980s, because they understand retail. A good bank relationship is important, particularly if a business has international ambitions. You’ll need support to process multiple currencies and to finance capital expenditure when setting up in new markets. You also need to talk to people with experience of expanding overseas. There is maybe something government could do here, such as connecting non-competing entrepreneurs to share advice.
Retail isn’t necessarily easy at the moment. There are things the government should do to support the industry’s growth. In the meantime, retailers themselves must work hard to expand.
This is an excerpt from LondonlovesBusiness.com’s Securing Britain’s Growth – read the full publication online now
London business leaders tackle boosting enterprise, nurturing talent, growing exports, driving digital and securing growth in key industry sectors