The boss of Frasers Group, Michael Murray, has described the business rates regime as a “disaster” and urged the government for an immediate overhaul of the system.
Murray, the son-in-law of Mike Ashley, who founded the retail powerhouse, told The Gentleman Journal’s podcast that most of the company’s rent bills are now equal to the rates they pay on their buildings.
He said: “[The] government needs to jump in and have a transformation reform on the business rates regime. Most of our rents now are equal to the rates that we pay for the buildings so it makes it unviable.
“You are paying rent twice, whereas, historically when there was no online, rents were higher and the rates were benchmarked at broadly 50 per cent of what the rent you were paying.
“Now the rent has come down so much because online has eaten away at the retail sales. Landlords are the only ones that have the flexibility to reduce the rent but the rates have not reformed anywhere near quick enough.”
Murray, who oversees the running of a number popular high street stores such as Sports Direct, also said the current system was “outdated” and it was built for “retail with no online”.
He added: “It’s so outdated. It needs to be reformed to encourage retail investment.”
Murray’s comments come at a challenging time for the retail sector, which is currently battling a slow down in spending due to the cost of living crisis.
But the company has manage to weather the economic storm quite well in recent months, posting a 15.8 per cent jump in revenue in the last financial year, totalling £5.56bn.
Chief of the retail empire told podcast listeners that he was confident in the future of the business.
He said: “I do believe that we can capitalise on different trends within the marketplace. If people want to trade down, we have the offering for that consumer or if people want to trade up into super luxury and start wearing £900 Balenciaga trainers, we can cater for this.
“We are well diversified with a broad range of aspiration brand. We have gone from 20 stores in 2017 to 70 stores and we will be 80 stores by the end of the financial year.”
Frasers CEO calls for urgent reform of ‘outdated’ business rates regime