Physical retailers want bigger stores despite online expansion

By David Shrimpton in Industry News 13th October 2021

More than half of mid-market retailers plan to make their stores bigger despite the widespread focus on online business, according to a leading accounting firm.

RSM, which surveyed retailers with an annual turnover of more than £10m in its latest study, said 58% of those physical retailers want to increase the footprint of their stores.

More than a third of those questioned said business rates are the biggest barrier to remaining competitive and were calling for rapid reform in the rates system.

Alongside making their stores bigger, 83% of physical retailers said they wanted to increase the volume of products offered online.

Jacqui Baker, head of retail at RSM UK, said: “When we see household names disappear for good, or go solely online, people start questioning the relevance of the high street in an increasingly digital world.

“However, mid-market retailers are planning to invest in more stores –evolving the high street and offering consumers a different, more enhanced shopping experience.

“Retailers are pushing ahead with this investment despite the ongoing burden of business rates and the crippling impact that they are having on the sector.

“Many will be hoping the long-awaited business rates review due this autumn will deliver significant changes, in particular reducing the tax that can be higher than rents in many cases.

“Realigning this imbalance is crucial to support the sector to compete effectively with online-only businesses and others vying for a share of consumer spend.

“The government needs to step up and announce business rate reform in the Autumn Statement to safeguard the future of the high street.”

Kelly Boorman, head of construction at RSM UK, added: “To meet the growing needs of the online market, there is acute demand for warehouse space.

“This is not only fuelling rent inflation and supply shortages, but it’s driving a boom in construction as the UK plays catch-up to this accelerated shift in consumer behaviour.

“However, widespread material and skills shortages across the construction sector, combined with challenges around planning, are slowing down progress, which could create a longer-term barrier to growth for retailers.”