Does it matter if the high street dies?

[Esceptico]

Online shopping is in the process of transforming shopping. Covid is accelerating the process. Likely a lot of high street shops will close in the next decade. I can see that it could be a loss to city centres because shops bring footfall and lots of other businesses may suffer eg bars, cafes and restaurants. However, on the flip side what do most shops really offer and how much value do they add in the buying process?

Clearly they must add to the cost of stuff you buy because the sales price has to cover the rent, wages and profit (if they make any). Online distributors should have a much lower cost base and assuming sufficient competition in the market should result in lower prices.

From an overall economic perspective the people employed in retail could perhaps be doing something else that is far more productive and value added.

[Esceptico]

Olivera said:

The high street is in a large part shafted by our antiquated tax system, that is over-taxation of bricks and mortar (e.g. business rates), and vast under-taxation of certain online stores (e.g. Amazon and their UK fulfillment only operation, with sales booked in Luxembourg).

You only pay tax if you make profits. I think many U.K. retail businesses would like to be in the position to pay some tax!

[Esceptico]

Gecko1978 said:

It matters if you work there. Also while online can provide same product its can't replace all the jobs. Not the consumers pronlem of course but it does have an impact. High st store, staff, cleaning staff, security, store displays and branding, small cafes catering for customers, other shops open as big stores attract foot fall. Or faceless warehouse, less staff, no branding, no cafes, less support staff etc.

But are they “good” jobs? Most retail jobs add very little value. That wasn’t necessarily true in the past when a well trained shop assistant could advise you on your purchase. However nowadays you can do your research online and get feedback from people who have actually purchased what you want to buy. More relevant and free.

Online usually offers more choice too.

Of course, only good news if growth in the economy means that people made redundant from retail can be retrained/redeployed. If they just become more call centre employees or do McJobs then no gain.

Looking forward the U.K. employment age population is going to shrink (absent immigration) so reducing the number of people in retail probably a good thing.

Making city centres more focused on living rather than shopping probably a good idea too. Just need to ensure that some of the space freed up can be used for parks and public areas to make life in the city more pleasant.

[Esceptico]

Olivera said:

They still pay (at least) NI, PAYE, VAT and Business Rates even if they don't make a profit.

This is the antiquated tax regime I was referring to: https://www.bbc.co.uk/news/amp/business-55971003

Amazon's total 2021 Business Rate's bill is estimated at £71.5m on sales of ~£26.5b. Topshop's (Arcadia) business rates bill is estimated at £91m, on perhaps (at best) £2bn of sales.

Okay. I wouldn’t normally include rates as “taxes”. PAYE and VAT are paid by employees and customers respectively. They are merely collected by retailers.

Amazon presumably has less building space and presumably on the outskirts or outside of major towns with less infrastructure and hence lower rents and rates. Councils are probably struggling because they have relied on higher business rates for city centre shops and offices but are going to be hit hard by online shopping and probably WFH. On the other hand, if fewer people are going into the city every day maybe they can save costs.

[Esceptico]

Liokault said:

If you take the shopping away and add housing, what’s the draw? I can drive to 5 (off the top of my head...prob more) out of town Costa/Starbucks, not to mention a bazillion other brands, quicker than I can drive to my nearest city centre. With out the draw of shopping or banking, why would I bother?

Maybe doesn’t need a draw for non residents. More residential properties = more residents = more demand for services - cafes, restaurants, gyms, cinemas. Fewer shops will mean fewer cars in the city centre making it a nicer place to live. People might then move back in from the suburbs.

[Esceptico]

Previous said:

As has likely already been mentioned, it matters, largely because the rates keep the council afloat.

Those rates, tax in any other name, are taxes which the online players don't have to pay.

This is part of the price difference of bricks and mortar vs online (but not all of it).

Personally I believe an online sales tax is needed to provide some balance. Yes its not fair taxing the consumer directly, but that's who'd pay it anyway ultimately, plus easy to administer at point of sale to minimise avoidance.

Of course, central govt won't want to that due to the perception of raising taxes, and that the local councils would benefit so little political capital, so for now we'll just carry on on the same old merry go round watching store after store go to the wall and council taxes rise.

We already have a sales tax - 20% VAT - that is already far too high so I don’t see the justification for yet more taxes just to prop up failing shops.