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Tim Steiner has no reason to sound so indignant Tim Steiner has no reason to sound so indignant
(3 months later)
Tim Steiner, co-founder and chief executive of Ocado, has many reasons to be cheerful. He has opened the company's second big distribution centre on time and on budget. Thanks to the distribution deal with Morrisons, he should be able to use the extra capacity far faster than originally planned. Meanwhile, Waitrose's objections to the Morrisons alliance appear to be evaporating.Tim Steiner, co-founder and chief executive of Ocado, has many reasons to be cheerful. He has opened the company's second big distribution centre on time and on budget. Thanks to the distribution deal with Morrisons, he should be able to use the extra capacity far faster than originally planned. Meanwhile, Waitrose's objections to the Morrisons alliance appear to be evaporating.
Other partnership and know-how deals, next time outside Britain, could follow because the world seems to be coming round to the Ocado view that centralised automation, rather than in-store picking of goods, is the cheapest way to serve the online grocery market. And the share price is flying: from 50p last autumn to 309p. Another year of pre-tax losses (albeit modest) is on the cards, but a lot of infrastructure has been built and the popularity of the Ocado service with its customers is not in doubt.Other partnership and know-how deals, next time outside Britain, could follow because the world seems to be coming round to the Ocado view that centralised automation, rather than in-store picking of goods, is the cheapest way to serve the online grocery market. And the share price is flying: from 50p last autumn to 309p. Another year of pre-tax losses (albeit modest) is on the cards, but a lot of infrastructure has been built and the popularity of the Ocado service with its customers is not in doubt.
But Steiner is being myopic when he argues that traditional bricks-and-mortar retailers need to stop moaning about business rates. If he surveyed the retail landscape through the government's lens, he would see that the current system of taxing the industry via a property-based charge is last century's model.But Steiner is being myopic when he argues that traditional bricks-and-mortar retailers need to stop moaning about business rates. If he surveyed the retail landscape through the government's lens, he would see that the current system of taxing the industry via a property-based charge is last century's model.
It is true, as Steiner says, that Ocado and other online-only players pay business rates on their warehouses and employ thousands of staff. But the burden of charges are hardly equal given the different property needs. The risk for the government is that, as online shopping expands and the high street shrinks, the tax base from the retail industry will collapse one day.It is true, as Steiner says, that Ocado and other online-only players pay business rates on their warehouses and employ thousands of staff. But the burden of charges are hardly equal given the different property needs. The risk for the government is that, as online shopping expands and the high street shrinks, the tax base from the retail industry will collapse one day.
This debate is not about "punishing" online retailers for their success (and we'll ignore Amazon's Luxembourg tax dance on this occasion). It is about a cash-strapped government's self-interested need for income. If it pushes too hard on business rates, which bring in about £7bn a year, it will end up with less income if there is no balancing measure to collect more from online retailers.This debate is not about "punishing" online retailers for their success (and we'll ignore Amazon's Luxembourg tax dance on this occasion). It is about a cash-strapped government's self-interested need for income. If it pushes too hard on business rates, which bring in about £7bn a year, it will end up with less income if there is no balancing measure to collect more from online retailers.
A tweak to the system of business rates (which may be all that is required) would hardly spell doom for the online-only brigade. Ocado et al have no reason to sound so indignant.A tweak to the system of business rates (which may be all that is required) would hardly spell doom for the online-only brigade. Ocado et al have no reason to sound so indignant.
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