From the NTI Newsroom - Free News, Views and Opinions for our Glorious Restructuring and Insolvency Sector, Every Day
The 1994 Northridge earthquake was a moment magnitude 6.7, blind thrust event that occurred on 17 January 1994, at 4:30:55 am PST in the San Fernando Valley region of the County of Los Angeles. It wreaked havoc in Greater Los Angeles, and was the last time shopping streets looked as knackered as they do this morning (Sunday 31 January). Some of the media have called it 'high street devastation', but we in the NTI newsroom think of it in a slightly different way - professional negligence.
ASOS was formed in 2000 and Boohoo in 2006 and both have had the foresight and grit to do what any teenager could have predicted ten years ago, before either of those businesses had really taken off. The idea? Sell wide ranges of disposable fashion at affordable prices, with easy returns and catchy names. Job done. Big cheeses at Debenhams, Arcadia, Cat Kidson, Principles, Oasis and even John Lewis and M&S should be donated white sticks and disqualified from going anywhere near a company boardroom for life, so negligent are they for catching sight of a Next Directory (launched in 1988) in their daughter's bedroom and not thinking:
"Hello? There's the nascence of an idea here ..."
We feel incredibly sorry for the thousands of shop staff who find themselves lying in the mud-bath caused by the retreat of the big dinosaur brands, but can experience nothing but disgust for myopic so-called 'retail gurus', who couldn't spot an ostrich on their end of their noses. We reported last week from the NTI newsroom that Boohoo broke the serve of their Internet rivals by swallowing up Debenhams in a paltry looking £55 million deal. Now we hear that ASOS have broken back, being on the brink of sealing a deal worth nearly £300 million to buy TopShop and Miss Selfridge. Not the stores, you understand, which will remain boarded up and soulless, but the fast fashion brands which are designed to last less long than the paper carrier bags they are transported home in by eager but fickle shoppers.
If the high street really is to change, and we have our doubts, it is the fault of these over-fat, self-unaware, short-sighted retailers who wouldn't know their elbows if they were up their arses. If you like to feel your fashion, stroke your shopping or paw your purchases, rather than just scan a screen, it is here you should aim your blame.
But, wait. There is the ovum of an idea that is being fertilised in a tiny way that could grow big in the coming months. Asset managers, such as Legal & General (L&G), are trialling the concept of offering rent-free fully refurbished shop premises for two years, with the property owners even covering the business rates for that period. If you are a girl with an idea and you would love to see if it seeds in the public space and are offered premises for no rent and no rates, how high would you jump?
This is happening now in Poole, Dorset, where L&G, in collaboration with the local council, is rejuvenating Kingland Crescent, a row of boarded-up shops in the town, to breathe fresh life into the neighbouring Dolphin shopping centre, which it bought for £58 million in 2013. Councils and developers alike are looking at increasing the pulling power of actual shopping streets (with real rain and authentic potholes) to lure shoppers who must be mighty sick of their computer screens by now and desperate to 'pop down to the shops', meet their mates, have a coffee, a sandwich and a laugh, ending up in a pub sharing a bottle of white between three. Beat that Internet.
Shoppers are put off by boarded up shops and shabby pop-ups selling calendars and eight thousand different shades of phone covers. Apparently, what we all want is an organic, plastic-packaging free vegetable shop alongside an independent fishmonger, an art gallery and a Peruvian coffee shop. If that means asset managers don't get rent for one of those outlets, but people will then nip into one of their malls and buy two birthday cards for eight quid and a self-drying mop, all the better.
But it will have to happen quick. The growth of Boohoo and ASOS is having a direct effect on the income of our glorious country. Not only do they not pay as much tax on purchases, due to clever domains and sleight-of-jurisdiction, but Internet shops do not pay Business Rates. Despite making up 5 per cent of the economy, retailers pay a quarter of the UK’s £31 billion business rates - which, on a relative basis, are the highest property taxes in the Organisation for Economic Co-operation and Development.
The next James Bond is already under pressure to extend a 12-month moratorium on business rates, some of the previous payers of which are saying they will be forced to close outlets if the tax reappears at the beginning of April. Whatever evil villains Rishi will face when he lines up with the Broccoli family in 2023, none will be as fiendish as a retailer scorned and beaten by the Coro ... blah, blah, blah.