I know that I have been
rather quiet for a while, but I did not want to add to the hysteria
that built up regarding the end of the Mayan calender. As while many
of the topics I wanted to discus, debate, were and are critical of
the currant status quo, I personally see the future as potentially
very positive. If we can all learn to start adjusting the way we
carry out our economic activities.
The news yesterday is a
rather apposite illustration of problems with the currant economic
model, the video rental business Blockbuster going into
Administration. This follows on the heels of HMV the record
retailer, and Jessops the photographic retailer. Had each of the
nearly 1000 stores been smaller independently run shops, rather than
big chains, then there would not have been the sudden loss of ten
thousand jobs.
While I am genuinely
sorry for the people who will loss their jobs, these companies were
quite ruthless in eliminating the smaller competition when they were
growing to become dominant players. Now each complain that it was
competition from online retailers that undermined their businesses.
While this is true, it
is far from the whole picture or story. Back in the late 80s I
worked for Jessops, and even then I could see that there were aspects
where the business was not that well run. For example the shops
stock carried in store was dictated by head office but with no real
flexibility. Thus when institutions such as the two Universities in
the city wanted premium equipment, it became a fight to let them get
their hands on it, even though these items were carried in stock
within the flagship stores. Therefore sales were lost to a small
independent retailer. I know of £50,000 worth of sales that were
lost in that manner while I worked their.
However the biggest
factor that is seriously damaging all retail businesses is the level
of rents. Last year another regional business went bust (Into
Administration), and in the local press a couple of months latter the
administrator was trying to pass on the leases of some of the shops
that were closed. Others were sold on. What shocked me was the
rents that the business had been paying for the shops. Many were not
exactly in premium locations, yet the average rent had been £800 to
£1000 per week. It was clear why the bakery business failed if they
had to pay those sorts of rents.
It seems to me that
when it comes to rents, Business Managers just seem blinkered about
the levels that are reasonable. Often just accepting what ever
demands a landlord asks. This is the real reason why our high
streets are full of empty shops. The unrealistically high and
unreasonable rents for retail premises have also been adding to
inflation as well as cutting jobs and more importantly preventing new
jobs from being created.
In far to many High
Streets there are empty shops. Yet when you look at the rents being
asked, they are totally unrealistic. In most cases the quoted rents
are 75% to 100% higher than any business can be be expected to pay
and sustain the business.
There is the need for a
reality check regarding rents. As this factor more than any other is
stopping new businesses start, existing businesses from growing and
jobs being created.
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