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Ocado boss: 'more high street shops should shut' Ocado boss: 'more high street shops should shut'
(3 months later)
Tim Steiner, the boss of online grocer Ocado, has launched an attack on high street retailers who are asking the government to review business rates, saying more traditional shops needed to close and telling rivals to stop complaining.Tim Steiner, the boss of online grocer Ocado, has launched an attack on high street retailers who are asking the government to review business rates, saying more traditional shops needed to close and telling rivals to stop complaining.
Steiner, who recently announced a deal with Morrisons to launch the supermarket's online service, said: "Bricks and mortar retailers need to shut more shops and stop moaning about it."Steiner, who recently announced a deal with Morrisons to launch the supermarket's online service, said: "Bricks and mortar retailers need to shut more shops and stop moaning about it."
He added that online-only retailers should not be forced to share the burden of business rates, which currently only apply to shops on the high street.He added that online-only retailers should not be forced to share the burden of business rates, which currently only apply to shops on the high street.
He said: "Some bricks and mortar retailers have started to blame business rates for the problems on the high street, which is wrong. They are jumping on the back of the Amazon tax debate.He said: "Some bricks and mortar retailers have started to blame business rates for the problems on the high street, which is wrong. They are jumping on the back of the Amazon tax debate.
"It is nothing to do with online retail that is causing the problems in the UK and we shouldn't burden online retailers.""It is nothing to do with online retail that is causing the problems in the UK and we shouldn't burden online retailers."
By contrast, Alliance Boots retail chief executive Alex Gourlay told MPs on Tuesday that a refusal to cut business rates could lead to a further rise in youth unemployment.By contrast, Alliance Boots retail chief executive Alex Gourlay told MPs on Tuesday that a refusal to cut business rates could lead to a further rise in youth unemployment.
Gourlay, who is in charge of the UK high street retailer Boots, told the business select committee: "The fundamental facts are ... the indirect taxation levied on retailers in the last ten years is now causing significant structural problems on the high street.Gourlay, who is in charge of the UK high street retailer Boots, told the business select committee: "The fundamental facts are ... the indirect taxation levied on retailers in the last ten years is now causing significant structural problems on the high street.
"I think there is potentially a risk to the 40% of people that join retail as their first job, which is as the shift towards integrated retail happens, and as there is less physical retailing and more online and supply chain retailing, less people are employed in the sector, and that's a risk."I think there is potentially a risk to the 40% of people that join retail as their first job, which is as the shift towards integrated retail happens, and as there is less physical retailing and more online and supply chain retailing, less people are employed in the sector, and that's a risk.
"The next phase could be reduction of space in retail as a whole and a reduction of actual jobs on the shop floor. I think that's a risk given the level of employment that is given to young people by retail and what they get from it.""The next phase could be reduction of space in retail as a whole and a reduction of actual jobs on the shop floor. I think that's a risk given the level of employment that is given to young people by retail and what they get from it."
The retail sector is the biggest private-sector employer for young people. However, a series of administrations in the last year, including Blockbuster, HMV, Jessops and Comet, has meant tens of thousands young workers lost their jobs.The retail sector is the biggest private-sector employer for young people. However, a series of administrations in the last year, including Blockbuster, HMV, Jessops and Comet, has meant tens of thousands young workers lost their jobs.
Last week Terry Duddy, the chief executive of Home Retail Group, owner of Argos and Homebase, warned it was not online competition that caused Jessops to go bust. He blamed business rates, which he called "ludicrous".Last week Terry Duddy, the chief executive of Home Retail Group, owner of Argos and Homebase, warned it was not online competition that caused Jessops to go bust. He blamed business rates, which he called "ludicrous".
Sainsbury's chief executive, Justin King, has suggested there should be a local online sales tax similar to that being introduced in the US – a position supported on Tuesday by Tim Fallowfield, the grocer's company secretary, as he appeared before MPs.Sainsbury's chief executive, Justin King, has suggested there should be a local online sales tax similar to that being introduced in the US – a position supported on Tuesday by Tim Fallowfield, the grocer's company secretary, as he appeared before MPs.
Fallowfield said: "In the United States they have issued a main-street fairness tax which is redistributing the tax burden by applying a local sales tax, which would apply equally to bricks and mortar retail as well as online retail."Fallowfield said: "In the United States they have issued a main-street fairness tax which is redistributing the tax burden by applying a local sales tax, which would apply equally to bricks and mortar retail as well as online retail."
Last month King said online retailers have an unfair advantage and that for every £1 his company has saved in corporation tax, it has paid £2.50 in extra business rates.Last month King said online retailers have an unfair advantage and that for every £1 his company has saved in corporation tax, it has paid £2.50 in extra business rates.
Steiner appeared indifferent to the complaints from the high street retailers and said his company already pays significant tax.Steiner appeared indifferent to the complaints from the high street retailers and said his company already pays significant tax.
He said: "We use vehicles and fuel, and the majority of the diesel we pay for has tax and VAT. We employ over 6,000 people in the UK and make substantial national insurance contributions in the UK and pay business rates on our warehouses.He said: "We use vehicles and fuel, and the majority of the diesel we pay for has tax and VAT. We employ over 6,000 people in the UK and make substantial national insurance contributions in the UK and pay business rates on our warehouses.
"Trying to tax [online fashion retailers] Asos or Pret-a-Porter for their success would be foolish.""Trying to tax [online fashion retailers] Asos or Pret-a-Porter for their success would be foolish."
The comments come as Ocado revealed a pre-tax loss of £3.8m in the six months to 19 May, compared with a £0.2m profit a year earlier.The comments come as Ocado revealed a pre-tax loss of £3.8m in the six months to 19 May, compared with a £0.2m profit a year earlier.
Steiner said the loss was the result of advisers' fees linked to the Morrisons deal and pre-opening costs of the new distribution centre.Steiner said the loss was the result of advisers' fees linked to the Morrisons deal and pre-opening costs of the new distribution centre.
Revenue rose nearly 16%% to £356m, while customer numbers increased to 360,000 from 337,000 at the end of the first half last year. Shares closed down 3.2p and 309p, although they are up 316% on a year ago following the tie-up with Morrisons.Revenue rose nearly 16%% to £356m, while customer numbers increased to 360,000 from 337,000 at the end of the first half last year. Shares closed down 3.2p and 309p, although they are up 316% on a year ago following the tie-up with Morrisons.
Business rates are charged on buildings used as business premises and based on a valuation of the property. The fees go to local authorities in the same way as council tax does for domestic properties.Business rates are charged on buildings used as business premises and based on a valuation of the property. The fees go to local authorities in the same way as council tax does for domestic properties.
The rates are non-negotiable although charity shops are exempt, which has led to landlords being keen to fill empty shops with charity tenants to avoid paying rates on an empty building.The rates are non-negotiable although charity shops are exempt, which has led to landlords being keen to fill empty shops with charity tenants to avoid paying rates on an empty building.
Diane Wehrle, marketing and insights director at Springboard, which monitors footfall and vacancy rates on the high street, warned that without flexibility, town centres run the risk of deteriorating.Diane Wehrle, marketing and insights director at Springboard, which monitors footfall and vacancy rates on the high street, warned that without flexibility, town centres run the risk of deteriorating.
She said: "What you get is a spiral of decline, especially in smaller towns. When a big chain goes bust you get large, empty stores in town centres, but because the overheads are so huge, very few retailers want to take that on. So, customers then leave, making the remaining stores suffer, causing a spiral."She said: "What you get is a spiral of decline, especially in smaller towns. When a big chain goes bust you get large, empty stores in town centres, but because the overheads are so huge, very few retailers want to take that on. So, customers then leave, making the remaining stores suffer, causing a spiral."
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