International retailers put physical first
intu Chief Executive David Fischel takes us through international retailers' views on UK retail market
mentioned a desire to expand into the UK
Research commissioned by intu and Revo, the retail property trade body, into international retailers’ views on the UK market chimes exactly with what they have been telling us for several years about its attractiveness.
The sector is recognised throughout the world for its dynamism as UK retailers respond rapidly to changing consumer demands, with the most successful businesses investing in space within prime shopping centres like intu’s supported by e-commerce strategies.
Our research among 130 international retailers reveals what they do and don’t like about the UK market and how they think it compares around the world. And it shows that the UK ticks many boxes thanks to its scale, flexible labour pool, sound legal system, strong digital infrastructure, stable economy and low corporation tax. The list goes on with many other positive factors mentioned.
Overseas retailers entering the UK consider physical stores first but they're wary of rates
The physical store’s primacy is also evident internationally with the research showing that most overseas retailers entering the UK consider physical stores first, with e-commerce regarded as an important complementary channel.
However, international retailers are wary about entering the UK. Partly because the market is seen as very competitive and sophisticated thanks to the number of high quality players here already – good news for consumers.
But it’s also clear that property taxes, notably business rates, are a major disincentive as the UK is way out of line with its international peers. International retailers do not understand why they are so high here and of all the questions they were asked, this, and the complexity of the UK planning regime, attracted the most negative scores. Almost three quarters of the retailers surveyed said they would not come to the UK as a result of these disincentives.
Investing in the UK retail market
Our report with Revo offers a series of policy recommendations that we believe will enable investment and growth, placing the UK at the forefront of retail globally.
An important sector
Keeping local economies thriving
The long held view of intu and trade bodies such as Revo and the British Retail Consortium is that Government needs to review the present structure of business rates - but the current fiscal position makes it difficult for Government to be sympathetic. For sure, the system has proven insufficiently flexible to cope with the disparities in regional performance resulting from the 2008 financial crash.
We know how important the sector has been to local economies since then, with retailers in our centres generating more than £5 billion in sales last year and 4 per cent of the country’s retail workforce employed in an intu centre. This rises to 8 per cent of the local workforce at intu Lakeside and intu Watford and as many as one in 10 workers in the Newcastle and Gateshead area where considerably more people are employed at intu Metrocentre and intu Eldon Square than at the Nissan car factory in Sunderland.
Revo and the BRC do a lot of fine lobbying around the importance of the sector to the UK economy and it is reassuring that discussions with our centres’ constituency MPs confirm they understand its positive impact. But sometimes it seems that the sector’s success simply attracts Government revenue-generating measures which continue to harm the sector.