Tax retailers that make more than 20% of their turnover online, while subsidising high streets through cheaper rents and business rates. That’s the way to save those local high streets that aren’t already dead, according to Sports Direct’s founder and chief executive Mike Ashley, speaking to Parliament’s Housing, communities and local government committee this week.
The committee is currently looking at the future of the high street to 2030. Ashley, attending to represent Sports Direct’s summer acquisition House of Fraser, told committee members that a 20% tax on retailers that turn over more than 20% of their business online would make retailers “desperate” to keep their high street businesses up and running.
“If I’m a retailer I will make sure not to pay 20% tax, I’d keep 80% of my revenues going through the high street – I’d stop closing three stores into one,” he said. “I’d now say it makes perfect sense for me to cross subsidise those stores and keep it open. What’s more, what I’d like is if we had click and collect through the high street stores, that acts as a credit, means Sports Direct group would look to keep as many stores open as possible, knowing this internet tax is coming. I bet we’d go on an opening spree.”
Click and collect would encourage shoppers to come into stores, and then move on to the high street, as would free parking and park and ride schemes, says Ashley. “We’re going to make sure people go to the high street to get those parcels, and don’t get them delivered them at home, because it pays us to,” he said. “If we have to give them gift vouchers to come in the store, not only going to visit our stores but the high street too. You need to give them free parking. It negates the whole free click and collect, and get a voucher because they’re paying in parking fees. Everybody has to come together and look at it.”
Councils, landlords and retailers must all work together, says Ashley, if they are to save the high street. He put the blame for what he sees as the death of most high streets firmly down to the internet. “It’s not my fault the high street is dying,” he said. “It’s not House of Fraser’s fault, it’s not M&S’s fault, it’s not Debenhams’ fault the high street is dying. It’s very simple why the high street is dying. You all know the answer but we have to say it. It’s the internet. The internet is killing the high street. I know. We have got a £400m internet business. That’s £400m – guess what that affects the most. The high street, by definition. The question is what to do about it. If you want to save the high street you have to address that problem it’s as simple as that.”
Despite this, Ashley sees a role for the department store – as long as landlords can compromise on high rents. “The concept of the department store is actually correct,” he said. “You get everything you want in one building. What happens is they have a bad offering plus or minus in nearly everything. If you can get retailers to take the right amount of space in a department store, like House of Fraser but elevated, the Harrods of the High street.
“I think they have to evolve, and be different. It’s not about a sea of clothing any more. Why wouldn’t you put free computer gaming at the top – to drag that generation through the store?” The average gamer, he added, is 31 rather than 12. “Someone goes because they need to go. Interact. But don’t want to be charged to park to go there. Let’s assume my wife is an avid gamer and I’m not – she goes and does gaming, I wander off, buy a cup of tea, something like that. That’s the kind of thing that can change department stores, but they’re stuck with prehistoric rents. That’s why landlords have to take their share of the pain.”
Image: InternetRetailing Media/Paul Skeldon