Retail Sector

Kevin Foster Excerpts

Wednesday 6th June 2018 Commons Chamber

[Greg Clark]

Across the country, from time to time, businesses will close. I am familiar with Grimsby, as the hon. Lady knows, and one of the actions we are taking, which I know she will support, is to have a town deal with Grimsby to make sure that we maximise the advantages locally. Freeman Street in Grimsby shows this phenomenon has been happening not just over the past 12 or 24 months; there has been a long-term change. Local dedication, based on knowledge of the local environment, is required to have the best prospects for a revival.

[Kevin Foster (Torbay) (Con)]

The Secretary of State rightly refers to the fact that towns have to look at change. Does he agree that in many cases it will be for local authorities to examine what the needs of a modern town centre are as a destination, rather than at what its needs were in the 1950s and 1960s, in a very different retail era?

[Greg Clark]

My hon. Friend is exactly right about that. Of course many of our towns acquired shopping centres and shopping malls to make them more attractive at that time, which again was a big change. There is constant change in what the offer and draw of town centres is, and local authorities are very active in thinking about how they can make their places as attractive as they can.

According to the latest market data for the last five years, covering the period from 2013 to the end of 2017, 191 retailers in this country have gone into administration. That compares with the 202 that did so in the five years before, so we have not had the sudden collapse that the hon. Member for Salford and Eccles was hinting at. During the last five years, the number of stores affected by those failures was 7,429, compared with 19,639 in the previous five years. So it is very important that we do not paint a picture of British retail undergoing some sort of experience that has never happened before; we need to make sure that its dynamism results in positive outcomes and not regard this as completely out of the ordinary.

The hon. Lady cited examples of closures and, as I said, they are hugely hurtful and worrying for everyone caught up in them. However, she conspicuously failed to mention the other side of the equation. If she reads Retail Week in any given week, she will see example after example of stores that are opening and of companies that are expanding. She could have mentioned that just in January the Co-op committed that it will open 100 new stores during 2018, creating 1,600 jobs. Lidl is investing £1.45 billion in expanding its UK presence, and Aldi is now the fifth biggest retailer in the UK and it aims to have 1,000 stores by 2020. Lest anyone think that discount retail means discount wages, Aldi has pledged to become the UK’s highest-paying supermarket by 2020.

Our tastes and habits are changing. Home delivery from stores was once considered a relic of pre-war and immediately post-war times, but now it is increasingly standard for all the big supermarkets; Ocado has recently joined the FTSE 100 on the back of its growth. We have more and better choice through online retail than ever before, as colleagues have said. ASOS is now the UK’s largest clothing retailer by market valuation, and this week the British Retail Consortium showed that total retail sales increased substantially in May. The hon. Lady does the retail sector and the country a disservice by claiming that we are seeing an annihilation of the high street. We need to be much more practical and positive about the prospects.

However, our habits are changing. We are buying more and more each year— retail sales are buoyant—but we are choosing to buy more of that online, which of course provides a challenge. In 2007, 3% of total retail sales were bought online, yet in little more than a decade—by May this year—that had grown to 16.9%. That is a revolution in a short space of time. In the past 12 months alone, online sales rose by 11.9%, and clothing and footwear sales online rose by 24.1%. The consultants Oliver Wyman forecast that 40% of non-food retail sales will be online by 2030. That is how people are choosing to buy so, just as happened when supermarkets challenged individual shops, retail will look very different in the future. If we choose to buy 40% of goods online, not all the shops we have been used to will exist as they do today. As the British Retail Consortium says:

“We have too much retail space…there will be fewer shops and their role will be different”.

It says that they will be based on convenience fulfilment or, most likely, fulfilling a desire for experience and local community concentration. Those are the changes that the sector anticipates and wants to participate in.

--- Later in debate ---

[Kevin Foster (Torbay) (Con)]

It is a delight to speak in this debate. Ironically, if I was not here, I would be back in Torbay, helping to present the “Love Your High Street” awards. One recipient was the Kind Grind in Lucius Street in Torquay and another was a bar called Peaky Blinders in Winner Street in Paignton; both areas are famous for independent shops. This is a welcome opportunity to debate retail, particularly given its importance for many communities up and down the country. Given some of the campaign leaflets that I see in my constituency, it is rather odd that no Liberal Democrat Members were present for the first two hours of the debate, but I shall move on.

Let me start with our town centres, and particularly the internet’s impact on them. No one is going to be able to roll back the digital tide. Most of us have in our pockets a phone with which we could order the entire contents of a department store, a do-it-yourself store and a supermarket literally while we are sat here, if we so wished. The internet has also brought services and products into areas that in the past would have found it difficult to access them. That does, though, present a challenge to our high streets. There is no longer a need to go to the town centre and in future people will mostly go there out of choice, particularly as technology becomes more and more simple. We can heckle and make party political points, but that will not affect the change. It is therefore even more important that we look into what we can do not only to make town centres attractive places for those who still depend on them for their goods, but places to which people would go out of choice to go into a local shop and have an experience.

One thing that came out of the Tesco burger scandal was that a lot of people reconnected with the desire to know where their food comes from and what it is. A lot of local butchers had a boost that they had not had for a long time as people realised that there was something about going to a shop and speaking to a local business that could tell them almost from which cow the joint or product they were buying came.

There is a real need to look into what we can do to shape town centres as places. Rates can be a double-edged sword. They clearly have impacts on businesses, and there is a debate for the long run about how sustainable the existing business-rates model is, given that it is based on an era in which that corner on the high street was the best place to be—hence the location of a lot of Victorian buildings that became banks—and a crinkly shed on the edge of town was not very profitable at all—

[Wera Hobhouse (Bath) (LD)]

Will the hon. Gentleman give way?

[Kevin Foster]

No, I will not, because the hon. Lady was not present for almost the first two hours of the debate.

The business rates system is now not all that appropriate, even though it was appropriate for the shopping patterns of the 1950s. Of course, if we look at it the other way around, by retaining business rates and taking the growth in them, councils can fund exactly the kind of regeneration that is needed in our town centres. So there is a double-edged sword for local authorities in respect of how business rates can be used in future. The existing structure is certainly not all there.

I could not agree more with my hon. Friend the Member for Mansfield (Ben Bradley) about the need to tackle long-term derelict properties in town centres. I think particularly of one in Paignton called Crossways, which is a pretty poor example of a 1960s shopping centre. It keeps going only because of the car park there, the mobile masts on top of it and a lease that was particularly badly negotiated by one retailer, which is still paying even though it shut its shop in the centre some years ago.

The problem with the existing compulsory purchase rules is that yes, in theory a council can get hold of a property like that to push forward regeneration, but the rules are cumbersome. I fully accept that there needs to be protection for people’s private property, particularly their homes, but if commercial properties—no one’s home—have been empty for many years, there comes a point at which it would make sense to make it much simpler for councils to compulsorily purchase properties in order to deal with eyesores. That simplification could be subject to protections based on how long a property has been empty, rather than on values and costs. Some owners almost rely on the fact that their property is such an eyesore that one day someone—I am thinking particularly the taxpayer—might pay a significant amount to have it dealt with.

It is right that local authorities play their part. Torbay Council is starting to look at the future of planning for our town centres, particularly in respect of Torquay, where there is a debate about its size and what we can do to revitalise it by bringing in residences and expanding student accommodation, particularly around the language colleges. That could bring a second wave of life to the town centre. We also need to deal with older, poor-quality office accommodation which, if replaced by new accommodation, could bring jobs and employment back into the town centre and provide the stimulus of people who work in the town centre then shopping, eating and drinking in the town centre after work or on their lunch break.

There is a positive story to be told about the future of our town centres, but they will be very different from what we have seen in the past. People will not use them out of necessity, so they will need to be encouraged to use them out of choice. There will still need to be essential services, such as local post offices and a network of local banks, but we need to be conscious that just standing in the way of technological progress is a strategy that will be as successful as it was for the Luddites who tried to argue against industrialisation 200 years ago. The Government can make a difference through their business rate policy, by giving local authorities more powers and by making it clear that there is still a retail success story in the future.