Tui CEO Fritz Joussen commented in Tui’s recent results, that the tour operator would be putting more emphasis on digitalising sales and moving them online, at the expense of its high street network, because he felt that the Covid-19 outbreak has forced shopping habits further online.
In the short term, it’s difficult to argue against this theory, as most high street shops will remain shut until 1st June 2020 at the earliest. A full lockdown of 3 months, which has forced customers to move online.
This trend is set to continue as Social distancing and restrictions, preventing customers from trying on clothes, will further damage this distribution channel. Customers may be willing to queue outside supermarkets for food, but will they be willing to enter 10-15 separate queues on a “browsing” Saturday shopping trip.
We are likely to see a growth in “Cross Channel” shopping, where customers review samples in the flesh, but ease the shopping process, by capturing a QR code and ordering their size for home delivery via their phones or even gain “Fast Pass” appointments to return later to beat queues.
However, I do feel these “natural” changes are being accelerated by imbalanced taxation structures, where “business rates” are strangling the high street. Although high street rents are reducing to reflect the balance between supply and demand, business rates continue to increase as local council’s become desperate for revenues to balance their books.
On the other hand, we hear regular reports about how internet retail giants like Google, Facebook and Amazon via clever legal structures, are paying minimal taxation in the UK as a whole and zero to local councils.
If we want to save our high streets, I propose an increase of online VAT payments to 25%, with the extra 5% being allocated to the postcodes that goods are delivered too. It would take no more than 2-3 days to create the computer programs required to “tag” sales with the postcode they are delivered to, along with the 5% Vat attributable, so that it could be paid to central government and then passed on to fund local councils.
This new VAT income, which is similar to “state sales taxes” in the USA, would allow local councils to reduce business rates and rebalance cost structures in favour of the high street.
However, do customers want to save the high street?
I believe that the high street is a key plank in the UK’s Social community, providing an opportunity for all ages to meet and spend time with friends, shopping and enjoying a coffee or in my case a quick beer.
Do we really want grate swaths of derelict town centres to spring up, because of our consumerist desire for cheaper online goods?
The answer may well be yes, but lets at least allow shops to fight on a level playing field, by counterbalancing business rates with a higher online VAT bill.
It’s a simple and deliverable idea.