New John Lewis boss Sharon White must champion business rates reform

Ahead of Sharon White’s first day as Chair at John Lewis this week, Colliers International has urged the retailer to join the call for business rates reform.

Analysing John Lewis stores in the UK, the real estate services and investment management company estimates that the department store business (not including Waitrose) faced a business rates bill of around £57.4 million in the current year - more than 30% higher than before the 2017 revaluation. This is due to rise further to £59 million next year.

“The increasing shift to online shopping, rising costs, including the rise in the minimum wage and dampened consumer confidence are all taking their toll on traditional department stores and John Lewis is no exception,” says John Webber, Head of Business Rates at Colliers International.

“We understand it is looking closely at its management layers, its annual bonuses, its Christmas advertising spend and its position with its various landlords. With such a drop in sales, it is no wonder the company is needing to take defensive measures.”

Business rates are, however, set in stone with bills likely to continue to rise over next year. With 2021 revaluation around the corner, John Lewis should get some reprieve in 2021/2 since rate bills should reflect the reduction in retail rental levels, as seen at April 2019. But as Webber points out, this would only kick in if the government allows values to move to their correct levels immediately and does not implement a period of transition, as it did so disastrously after the 2017 revaluation.

Webber comments: “Like other retail operations, John Lewis is facing rising costs which it is attempting to keep under control in a difficult market. Business rates are playing their part in keeping such costs high. It would be massively disappointing if the government shows it has learnt nothing from the current retail predicament and goes down the downward transition route as it did at the last revaluation.”

“We need to allow retailers such as John Lewis a chance to ease their rates burdens immediately. Dame Sharon should join in the campaign to make sure this happens.”

“Sadly, given recent announcements designed to help smaller retailers no one in power seems to appreciate that it is the bigger retailers, the chains that are the big employers in the sector. Maintaining a punitive tax system against the bigger retail players whilst providing relief for the smaller retailers, does little to prevent store closures and job losses as we have seen elsewhere in the market. When quality retailers like John Lewis start to feel the pinch, we know we are really in trouble,” he concludes.

John Lewis did not respond to our request for comment.