Death on the high street
I “felt a pang” last week on hearing that House of Fraser had gone into administration, and would be rescued by Mike Ashley, the billionaire owner of Sports Direct, said Jenny Mccartney in The Sunday Times. Ashley snapped up all 59 of House of Fraser’s department stores and its stock for £90m. Any kind of rescue is good for the chain’s 16,000 staff, I suppose, but “what a sign of the times”: it’s like hearing that your “genteel great aunt” has signed her house over to a “ruthless local businessman”. A “chill wind” is blowing through the high street, and department stores are particularly vulnerable: BHS has disappeared, and Marks & Spencer and Debenhams are closing stores. So far this year, about 30,000 retail jobs have been lost, said Ryan Sabey in The Sun. Toys R Us, Maplin, Poundworld, Warren Evans and Mothercare have also either shut down or announced plans for “massive” cuts. Why is this happening? A lot of business has been lost to online sales, while bricks-and-mortar retailers face a disproportionate tax burden, said Nils Pratley in The Guardian. Consider this: at £4.62m, this year’s bill for business rates on House of Fraser’s store on Oxford Street alone is the same as Amazon’s total corporation tax bill in the UK last year. This is “absurd”. Philip Hammond, the Chancellor, said this week he would consider temporary measures such as an “Amazon tax” to level the playing field. He needs to do something soon, as opposed to offering “mere words”. No government has yet effectively addressed the issue of “global tax minimisation by online giants”, said Martin Vander Weyer in The Spectator. Amazon last year booked £7bn of sales to UK customers in Luxembourg, where it benefits from a “sweetheart” deal struck with Jean-claude Juncker, when he was prime minister there. It’s no use trying to shame the likes of Amazon into doing the right thing: they see themselves as “citizens of cyberspace, whose duty is to maximise shareholder value by exploiting conflicting national tax codes”. The answer is either to slash taxes for terrestrial competitors, or to increase international tax cooperation. “Neither is likely to happen soon, I’m afraid.”
The demise of the department store can’t be blamed entirely on Amazon, said Daniel Thomas on BBC News online. Those that are going under are the relics that have failed to invest and innovate: John Lewis, for instance, has ramped up its online presence and kept its shop floors up to date. But in general, the bigger stores are losing out to “nimbler” high-street rivals: the likes of Sports Direct, and “fast fashion” retailers such as Primark and Zara. I wonder what we are losing, as the world of House of Fraser gives way to Amazon and Sports Direct, with their vast warehouses and miserable working conditions, said Jenny Mccartney. “In the heyday of the department store, selling was an art, a science, a piece of theatre. It was also a career. None of that seems so true any more.”