Shoe Zone has announced that the return of business rates in April 2021 could lead to the closure of up to 20% of its store estate over the next two years. This could lead to the retailer closing 45 stores before April 2021 and a further 45 after April. The government suspended business rates in April 2020 in an attempt to protect businesses affected by the pandemic and resulting lockdown.
Anthony Smith, chief executive at Shoe Zone, said that the “suspension of business rates in April 2020 was a significant benefit for our business in FY20”. However, he added that the government’s decision to reintroduce the system in April 2021 and delay a revaluation was “unsustainable for most high street retailers” and that more closures will occur “until the government makes substantial changes”.
Mintel comment:
“Shoe Zone is once again warning of store closures due to rising business rates after campaigning for the government to overhaul them prior to lockdown in February 2020 and again in June 2020.
Like many fashion retailers, Shoe Zone has experienced falling revenues in light of the COVID-19 pandemic and had to shut 20 stores to reduce cash outflows. On the flip side, its online sales have risen and it was preparing for a focus on digital even prior to lockdown. In 2019, it increased the number of online exclusive lines, and was able to make a seamless switch to online during the lockdown.
Although Shoe Zone has been better prepared for online retailing than many of its competitors, the in-store experience is difficult to replicate online when it comes to footwear. Data from Mintel's Footwear Retailing - UK, July 2020Report shows that 37% said they visited stores for inspiration before buying shoes. However, with high business rates and online sales on the rise, it is indeed difficult for physical retailers to justify a large store portfolio. This will ultimately end up hurting smaller cities and towns across the UK as Shoe Zone concentrates many of its stores in out-of-town locations, where many rely on the retailer to be able to buy affordable footwear for the family.”
