The Chancellor's Autumn Statement recently announced that increases in business rates will be capped at 2% in England, instead of being linked to inflation. Business rates were set to rise by 3.2% in 2014, based on September's Retail Prices Index measure of inflation but as a result of the cap businesses are expected to save up to £3,375.
In addition the Chancellor announced that firms will be allowed to pay their rates in monthly instalments and the government plans to encourage small businesses on to high streets by slashing £1,000 from their rates bill. The £1,000 discount will apply to retail premises, including pubs, cafes and restaurants, with a rateable value of up to £50,000 for two years.
The British Retail Consortium says that the rates cap on its own will release an extra £90m into the UK economy next year and although this is welcome news for retailers, a full business rate system reform is not expected until 2017. In this sense, the Chancellor's statement does not go as far as many small businesses were hoping.
The business rates cap is a step in the right direction in these challenging times but a long term solution to the problem isn't in place yet. SMEs are the lifeblood of our economy; they generate half of the UK's national income and in the retail sector specifically over two thirds of shops are independent. Moreover, 43% of people are scared of losing the High Street. With such a valuable sector at stake, it's imperative that SMEs consider alternatives in order to build an offering which is future-proof and will enable them to grow.
To that end, small businesses need to acknowledge that people are increasingly shopping online and across mobile. In fact, research from Ofcom recently revealed that UK online retail spend rose to £1,175 per person in 2012, up 16 per cent year on year. The UK actually leads the world in online shopping; with spend more than double the average £560 spend per person. With so many people swapping the tills for their PCs, SMEs need to adapt towards online and innovation.
By tapping into digital, businesses can find new and innovative opportunities to develop and working in tandem with online the high street can flourish again. That's why we've been working with MyHigh.St in an initiative to get retailers online alongside their high street store. People are shopping differently now and with a digital presence, coupled with their unique qualities, Britain's small businesses can compete with big brands.
The personal approach is the truly unique ingredient that independent retailers have up on big brands. Many small businesses are worried about becoming 'faceless' online, but by replicating the fantastic experience that customers receive in-store on the web this problem can be combated. For example, you could offer advice on how to pair outfits in an E-newsletter or encourage shoppers to interact with you on social media to receive a discount next time they buy from you.
Overall, it's no secret that the UK high street has faced difficulties and with 18 high street shops closing their doors every day during the first six months of the year, it's clear that a different stead needs to be taken in order for small businesses to revitalise their retail offering. Our independent retailers already have personalised customer service on their side and with digital innovation they can keep that tailored approach, whilst growing in a way that echoes their customers' shopping habits.