Mike Ashley: “Mainstream high streets are already dead”

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Mike Ashley has called on MPs to impose a new tax on any retailers who make more than a fifth of their income online, warning that the “internet is killing the high street”.

The Sports Direct owner appeared in front of the Housing and Local Government Select Committee yesterday after demanding a full hour with them to discuss what needed to be done to save the UK’s embattled high streets, significantly more than the 15 minutes they had requested.

Ashley painted a bleak picture of the state of physical retail in the country, stating that they would not survive until 2030 should a radical change not be made.

“I want to make it crystal clear: the mainstream high streets as we think about it today – not the Oxford Streets and the Westfields – are already dead,” he said.

“They can’t survive… outside of London it’s going to be a ghost town.”

To counter its demise, Ashley became the latest to propose increased taxes on online retailers like Amazon and Asos, which have come under fire this year for the disproportionate amount of tax they pay compared to retailers with a bricks-and-mortar presence.

He suggested that imposing further taxes on any retailer who makes over 20 per cent of its income online should would encourage high street retailers to open more stores, rather than continue the shift online.

“It’s not House of Fraser’s fault, it’s not Marks & Spencer’s fault, it’s not Debenhams’s fault the high street is dying,” said Ashley, who acquired House of Fraser out of administration in August.

When asked by the committee what was in store for the future of House of Fraser, Ashley suggested that a tie up between his recently acquired department store and Debenhams, of which he holds almost a 30 per cent stake, could still be on the cards.

He added that “they should work together”.

Furthermore, he took aim at the current business rates system, calling it “prehistoric”, while suggesting that the retail industry needed to “come together and look at this” in order to save the high street.

“I know it sounds very socialist, I’m not this crazy capitalist that everybody thinks I am,” he said.

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15 COMMENTS

  1. Wow, so you would bankrupt everyone trying to fight this proposed tax, because incentivising more brick and mortar wont change customer behaviour. It will only break companies.

    • Spot on, Ryan! UK consumer spends more, per capita, than anywhere else in the world. UK consumer has enormous appetite for online purchasing. Like binge drinking, it’s a cultural thing here. Ashley is sounding like King Canute. Too late to stop that tide and besides, meddling in market forces just prolongs the pain and agony.

      Ashley complains about greedy landlords. What will happen if a new tax is implemented? What if online reduces and there’s a surge in businesses wanting High Street premises? Rise in rents, perhaps.

      Stop the Government offering incentives to companies like Amazon for setting up warehouses in areas that the Government deems appropriate to support. Creates uneven playing field. It’s like giving Goliath an RPG against David. Sort out the major indifferences first, especially the unfair advantage International businesses have with setting up HQs in Dublin to reduce their corporation tax. Facebook, Amazon, Apple… they all do it. #Unfair

  2. What Mr. Ashley makes perfect sense. It’s a level playing field equal to all. If we all went online and did our business. You would have empty cities and towns. Is that what you want? I don’t.

  3. He is right in many ways, there needs to be a level playing ground on taxation and the High Street needs to be re-invented to become a destination for visitors – not just shops, but markets, exhibitions, entertainment and leisure activities.

    • You level the playing field by reducing over-taxation and an over-valued commercial property market, not by increasing taxation on the very people who have been forced online by both those factors.

      • Whether an online tax is needed or a fairer tax system at least so brick & mortar retail is not disadvantaged.
        Like his views or not, Mike Ashley has a point here.

  4. So, if the high street “is already dead”, why is he buying up high street retail brands? And why does he not just move Sports Direct online only?

  5. Just when I was beginning to warm to him he comes out with this rubbish.

    Retailers have only been pushed on to the internet because the cost of operating retail property has become so onerous. The main culprit in all that are rents.

    Rates are high too of course, but they’re driven there by high rents in the first place. Considering Ashely’s recent uncompromising position with landlords I expected this to be the main thrust of his argument.

    But calling for a 20% internet purchase tax is a preposterous and dangerous thing to do. Retailers who have had no choice but to decamp online have done so to cut costs to meet consumers expectations. Adding to their overheads will simply push them back to square one.

    Ashley seems to forget that we all pay a 20% purchase tax anyway in the form of VAT.

    Whilst I agree that business rates should be replaced with an additional local purchase tax (as I’ve been advocating for about 10 years), simply adding further taxation online will solve nothing.

    Any expectations that this additional tax revenue will somehow be ring-fenced to help the high street are naive. The money will disappear into the government coffers to be spent on the usual stuff of government.

    With the current administration that probably means more tax cuts for the fabulously wealthy, which might explain Ashley’s fondness for the idea.

  6. As a bricks and mortar retailer with a number of sites, naturally I have wanted in-town trade to return to previous levels. It won’t ever happen though, even when we are out of what is still a deep recession given the interest rates are the only thing keeping the UK afloat. Out of town retail made a huge impact and continues to grow, and online is doing the same, so even with greater consumer spend, in-town is going to continue to be the poor relation with increased costs for retailers and visitors. Having said all of this, whenever I try and get any of my landlords or landlord’s agents to see reason as I am trying at the moment, my mood changes and I look forward to the death of demand in-town retail space in order to hit the landlords hard. As a business we now have to work much more imaginatively to transition across to online and see the opportunity as opposed to the problems we have previously experienced with our particular offering.

  7. His sentiment here is actually welcome support as unless he has something planned we don’t know about he doesn’t actually operate many High St stores as most of them are in shopping centres or retail parks. A tax system should be fair to all operators in retail regardless of the route to market from street vendor to global entity but like others have commented the richest have the means to look for grey areas, legal avoidance and operate offshore to maintain a competitive advantage.

  8. The councils and government entities who give tax breaks to attract huge Amazon warehouses are responsible for part of the mess the high st finds itself in. Amazon pretends that the business they are doing in the UK is actually conducted in Luxembourg so I am not all sure Amazon even pays the same sales tax as the rest of us. Outrageous cheating the system by exploiting loopholes wherever they can possibly get way with it. We know they fiddle the corporation tax and even claim to pay staff in stock options to reduce their tax bill. So Bezos can indulge in his fantasies of space travel or God knows what. Meantime the High St collapses under the huge rent and rates bills Amazon avoids. Lucky little New Zealand has no Amazon and still has shops and High Streets.

  9. Well the only store that has this right is primark that’s why stores are booming always busy never out of stock of items all stores are stocked well because they don’t pay millions to have a separate buisness that’s killed the high street at this rate there only be primark left. I say stop online get back to stocking stores all that in a warehouse should be in store do people go in and can get size whatever in most stores and if not let’s order it in to store so it goes on the sales pad as in store purchase they come in and half time go home due to not having stock it puts customers off in the end they say no point going in never stock il order on line plus no charge for parking.abd some of the rundown towns too The trouble is retailers got greedy and now doing full circle.along with greedy landlords who are always on their yachts around the world I’m sure.

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