I have written once before about the invasion of 'charity' shop's helping to kill off shops in the local high street ....
The situation has only worsened since then, provoking some press comment.
Of course the Charity Retail Association and others in the sector, would argue that the charity shop retail sector is now an established fact in all town centres in the UK, and that they are a vital part of the current retail mix. They may well regret the loss of the small independent retailers, but blame this on issues that developed decades ago, and certainly not on the rise of the charity retail sector in the same decades.
They definitely don't agree that charity retailers gain any competitive advantage over normal retailers with regards to business rates charged. They state that most charity shops only rely on 'business rate subsidy' for about one third of their profit, the rest they generate through good retailing. In fact they sometimes state that many local councils don't pay the discretionary 20 per cent of the rates relief available to charities, but that ignores the fact that the remaining 80 per cent business rate relief is paid by central government - so in fact the subsidy is largely being paid.
However they don't just get business rates relief, but also obtain VAT exemption, and Gift Aid to grow their businesses .... they only generate the remainder themselves. In fact the Quarterly Market Analysis Report for April to June 2019, saw a period of growth for the charity retail sector, which markedly contrasts with many normal businesses in the high street retail sector, in what are challenging trading conditions.
The justification sometimes given for all these advantages is that:
(a) Charity shops are recycling at its best, saving tonnes of landfill every year for decades in the clothing sector.
(b) The charities supported via these shops are increasingly providing local services that the council cannot or will not fund any longer.
Much of their arguments come from a number of Demos Reports on the issues.
To which I would point out that:
(a) The clothes the charity shop sells, will still end up in landfill, just delayed by a fashion season or two. The other items will as well .... the charity shops just add another stage to the process, but the end result is the same.
(b) If more healthy businesses were paying business rates, VAT etc, then the local councils might well provide more local services.
(c) Normal shops provide real jobs, wages, pensionable work - charity shops provide no real employment in an area.
But I have also noticed recently, that many of these shops have taken to selling items that are either brand new, or sold at the same price as new. Also, even if you take into account the 'social good' argument put forward in defence of the charity retail sector, the fact is, that charity shops have a built in thirty three per cent plus advantage over a start up business in the same area and retail sector - this ignores the additional cost advantages of free voluntary workers in the charity sector, versus the costs of waged/pensionable employees in the normal retail sector.
All this aggravates an already difficult situation for real businesses, into an almost impossible one. It has hardened my view that charity shops should be regulated better. My suggestions are:
1). Only one charity shop for every twenty non charity shops in a street, or area i.e. are licensed and restricted.
2). Charity shops can only sell goods donated, and not anything that is new.
3). Charity shops with a turnover greater than £nnn, has to pay full business rates and pay minimum wages to all staff working there, as do the normal businesses.
If we leave things as they are, then the charity shops will kill the goose that lays the golden egg, and destroy employment in the local high street ... in fact they may well ending being the majority activity on many high streets except for bookies and pubs.
Surely it was never envisaged that the relaxed business and VAT rate rules for charity shops would end up replacing thriving businesses?
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| The National Press Such As The Daily Mail Have Raised This Issue On Occasion ..... |
The situation has only worsened since then, provoking some press comment.
Of course the Charity Retail Association and others in the sector, would argue that the charity shop retail sector is now an established fact in all town centres in the UK, and that they are a vital part of the current retail mix. They may well regret the loss of the small independent retailers, but blame this on issues that developed decades ago, and certainly not on the rise of the charity retail sector in the same decades.
They definitely don't agree that charity retailers gain any competitive advantage over normal retailers with regards to business rates charged. They state that most charity shops only rely on 'business rate subsidy' for about one third of their profit, the rest they generate through good retailing. In fact they sometimes state that many local councils don't pay the discretionary 20 per cent of the rates relief available to charities, but that ignores the fact that the remaining 80 per cent business rate relief is paid by central government - so in fact the subsidy is largely being paid.
However they don't just get business rates relief, but also obtain VAT exemption, and Gift Aid to grow their businesses .... they only generate the remainder themselves. In fact the Quarterly Market Analysis Report for April to June 2019, saw a period of growth for the charity retail sector, which markedly contrasts with many normal businesses in the high street retail sector, in what are challenging trading conditions.
The justification sometimes given for all these advantages is that:
(a) Charity shops are recycling at its best, saving tonnes of landfill every year for decades in the clothing sector.
(b) The charities supported via these shops are increasingly providing local services that the council cannot or will not fund any longer.
Much of their arguments come from a number of Demos Reports on the issues.
To which I would point out that:
(a) The clothes the charity shop sells, will still end up in landfill, just delayed by a fashion season or two. The other items will as well .... the charity shops just add another stage to the process, but the end result is the same.
(b) If more healthy businesses were paying business rates, VAT etc, then the local councils might well provide more local services.
(c) Normal shops provide real jobs, wages, pensionable work - charity shops provide no real employment in an area.
But I have also noticed recently, that many of these shops have taken to selling items that are either brand new, or sold at the same price as new. Also, even if you take into account the 'social good' argument put forward in defence of the charity retail sector, the fact is, that charity shops have a built in thirty three per cent plus advantage over a start up business in the same area and retail sector - this ignores the additional cost advantages of free voluntary workers in the charity sector, versus the costs of waged/pensionable employees in the normal retail sector.
All this aggravates an already difficult situation for real businesses, into an almost impossible one. It has hardened my view that charity shops should be regulated better. My suggestions are:
1). Only one charity shop for every twenty non charity shops in a street, or area i.e. are licensed and restricted.
2). Charity shops can only sell goods donated, and not anything that is new.
3). Charity shops with a turnover greater than £nnn, has to pay full business rates and pay minimum wages to all staff working there, as do the normal businesses.
If we leave things as they are, then the charity shops will kill the goose that lays the golden egg, and destroy employment in the local high street ... in fact they may well ending being the majority activity on many high streets except for bookies and pubs.
Surely it was never envisaged that the relaxed business and VAT rate rules for charity shops would end up replacing thriving businesses?
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