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Sainsbury’s boss on tax, High Street and ecommerce

By Dan Wilson June 21, 2013 - 3:21 pm

We don’t know what they will propose, but we do know that the British Retail Consortium are canvassing their members about saving the High Street and, it would seem, how to correct a perceived imbalance between the tax that High Street stores pay and that paid by internet retailers.

Of course, we don’t agree that online retailers aren’t paying their fair share: ecommerce businesses keep premises and employ staff as required just like a shop. But that’s not the view of Sainbury’s chief executive Justin King.

Just remember, King will be one of the voices at the BRC shaping the policy they come up with. It’s interesting that he calls bricks and mortar shops “real” with particular emphasis.

Here’s a transcript of the salient comments:

“Tax isn’t a level-playing field. There has been much discussion about the challenges our high streets are facing and we’re part of that conversation because we’re in most of the high streets. Around 200 of our supermarkets are in high street locations and almost all of our 550 convenience stores are in high streets.

And clearly real stores in real high streets bear the lion’s share of the tax burden in our country today. They pay rates. They employee people at a local level and, of course, that’s a good thing for local economies.

And businesses that only operate in the internet world don’t do that. There is a a big debate to be had, at a national level, about leveling the playing field between bricks and mortar high street type retailers and those that only operate on the internet.”

  • 4 years ago

    So will Sainsbury’s pay tax twice one for the Ahem, “real stores” and another online sales tax for their home deliveries?

  • elvis
    4 years ago

    This is outrageous. I rent a unit which is costs, I pay business rates on it, employ staff etc. What’s the difference between doing that and paying rates on a shop, which also has business rates, and employs staff? We’re all in the same boat as far as I am concerned.

    Does any one have a list of the companies campaigning for this?

    I know I will never shop at Sainsburys again, or buy fuel from them for that matter.

    I say we (online businesses) should boycott all high street stores involved in this campaign. sainsbury’s are hardly short of a few pennies.

    I understand high streets are struggling at present with many stores empty, but this is the economy in general.

    • 4 years ago

      Elvis,

      We don’t have a clue on what’s going on. The British Retail Consortium contacted us earlier this week stressing that they weren’t proposing anything yet, no plans were under consideration and and they were just canvassing opinion.

      Well, this man is in the BRC and here is his opinion.

      We’re reluctant to sit on our hands waiting for them to come up with a plan. We’d rather that an online sales tax was ruled out by government altogether.

      Dan

  • Glenn
    4 years ago

    The man said it “Perhasps customers should change were they shop.”

    Bye, bye Sainsburys.

  • Fozz
    4 years ago

    Just up the road there are 2 “real” distribution centres , employing “real” people at a local level, no doubt contributing to our local economy.

    The nearest Sainsbury’s is not a very convenient convenience store, and Mr King doesn’t give me any reasons to want to drive there…

  • Glenn
    4 years ago

    Sainsburys may claim to be High Street retailers, but from my experience the volume of floor space is at least that equivalent to 3 or more traditional high. Street stores. So for every Sainsburys store 2 or more traditional shops are displaced.

    If Sainsburys really want to see traditional shops returning to the High Street perhaps they could reduce the size of their stores and make room for others.

    Within my own town I have seen small retailers open and then close within a few months because bakers, butchers, green grocers and other small retails can’t compete against the big superstores.

    I don’t sell bread, meat or vegetables online and no additional tax on internet traders will encourage the return of these types of shops.

    So just what sort of shop does Sainsburys want to return to the High Street?

    There are numerous long tail products sold online which big retailers simply won’t sell. Indeed I sell a number of products which although not long tail are products that High Street retailers choose not to sell. An increase in tax would not encourage any High Street retailer to sell these products and the result of any additional tax would be a increase to the price paid by the customer.

    I am simply flabbergasted by Justin Kings hypocrisy , stupidity and greed.

  • elvis
    4 years ago

    High street started struggling because of out of town outlets like Sainsburys and Tesco etc setting up giant superstores out of towns. They don’t just sell groceries. They sell pretty much everything. These stores contributed to thousaands of specialist high street stores being forced to close, and many others have struggled since.

    If anything the giant out of town superstores that are over a certain size should be paying an additional “out of town” tax. They triggered the high street struggle.

  • High Street Retailer
    4 years ago

    All retailers/sellers will have a gripe about something!!

    High Street retailers will complain about online sellers.

    High Street retailers who sell online will complain about home online sellers.

    Home sellers will complain about having to publish their address online.

    All retailers/sellers will complain about out of town retail parks until they change hats and become customers!!
    Personally, I do not think the online sales tax will get off the ground, mainly due to the extra bureaucracy that will be involved, but being a high street retailer (who sells online) myself and attending local retailer Town Centre Meetings, the main gripe retailers seem to have is Car Parking Charges, footfall, online retail and opposition to any planning proposals that do not bring certain types of premium stores to the town centre.

    In my humble opinion:

    Retail has and still is changing at quite a fast pace.

    Town centres will need to become more compact, which is happening where I am as some of the outlying shop units have and are still being converted into housing.

    Rates need to be looked at, they are a massive cost on some units.

    Landlords need to be more realistic about the rents they are charging.

    I got my first shop in 2007 when rents were at their peak and when it was time for a lease renewal last year, the landlord was only going to consider a rent increase until I got quite a bit of information together to show that I was already paying above market value and I was prepared to move shops and the average period that shops were empty in my town was more than 9 months, in fact I was able to produce such a bleak picture for the area (The landlord was not local and as most of my sales were online, it didn’t matter about my location) that he agreed to sell me the building instead, (including the shop next door) so now I have double the retail space and triple the storage and paying less mortgage interest overall than I was paying rent for the single shop plus I have the asset of the building.

    I was lucky because the building didn’t go on the open market, however any that do come up in the town centre are being bought by developers and having any upper storage converted to flats and then being rented out, and with the storage gone, this restricts the type of retail business that could potentially use the vacant property which is why we probably have more than our fair share of Hairdressers, bookies, fast food outlets and payday loan companies.

    I would like to see Town centre bodies to actively promote the benefits of online retail to the High Street businesses that need it or even open to the idea but do not know where to start.

    If I was in power, my proposal would be:

    Reduce Business rates

    Scrap the VAT Threshold, if you sell (Goods or services) for profit then you’re liable to pass VAT on to HMRC from day 1. I say this because this is the area that I believe most “evasion” goes on and if HMRC has sight of this, then the figure should correlate in the figures submitted for self assessment.

    That said, I am not in charge in my own home, so there’s not much chance of me being in a position to implement it.

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