Sainsbury\’s boss talks bollocks

The Marketplace Fairness Act of 2013 will allow US states to force online retailers to collect a tax on the sale of online products or services.

The Act is being introducing in an attempt to level the tax playing field between the high street and online-only retailers, amid criticism about the amount of tax paid by internet groups.

In the UK, Mr King is one of a number of high-profile retailers who have warned that businesses rates, a tax on commercial property, are crippling the high street because there is no equivalent for online retailers.

“The burden of taxation falls very heavily on bricks and mortar retailers,” Mr King said. “I think we need to rebalance the tax burden.”

Business rates are costing the retail industry more than £7bn a year and increased by an inflation-linked £175m in April. The British Retail Consortium, the trade body, has held talks with the Treasury about their concerns after a string of high street retailers collapsed into administration earlier in the year.

Mr King said the Marketplace Fairness Act was designed “specifically to address this issue”. Shop owners in the US have backed the tax, although it has proved controversial because of concerns about how the tax can be collected when online transactions occur across state and national boundaries.

Bollocks. The MFA insists upon the collection of sales taxes, not business rates. Online retailers in hte UK already collect VAT. Thus it is not the same thing at all.

By the way. Online retailers also already pay business rates. It\’s just they pay them on their warehouses: because that\’s the business premises they use instead of high street retail space.

Amazingly, I don\’t pay business rates on high street retail space either for the simple reason that I don\’t use it. Funny that, eh?

55 thoughts on “Sainsbury\’s boss talks bollocks”

  1. In other news, London’s restaurateurs feel they are disadvantaged because those who choose to cook and eat at home are not paying business rates on their premises.

  2. Isn’t this just correcting a quirk of US state sales taxes in that they don’t apply to “cross-border” sales?

  3. ” Burden of taxation on Bricks and Mortar retailers” The buisiness rates form part of the expense of renting the premises. Without them would the rent not just go up to cover the difference.

  4. Tim, Mr King is just showing the ignorance that is required to head up a FTSE company.

    Has he every tried to import some cigarettes from say Spain or Belgium to the UK? Tosser!

  5. It’s also much cheaper to have a server running Magento/OSCommerce/Opencart idly waiting for customers than to have a person doing the same job.

  6. Retail buisiness rates are really a tax on the extra rent revenue gained from charging retailers rent that comes with the property having retail planning permision.

  7. Resale Price Maintenance was legalised by the American Supreme Court in 2007 , so barring States Rights decisions to exempt states, the online predatory discounting which does so much damage to High Streets in the UK should be less in the USA. RPM plus stonking LVT on warehouses and offices (Google has a monster planned for Kings Cross) should be enough equalisation, you’d think. But we do not live in reasonable times: RPM is never mentioned over here despite being a freely contracted arrangement that saw High Streets develop the way they did before its abolition in 1964 (its banned by all EU and Edward Heath wanted us in the Common Market despite the damage to retail and according to Helen Mercer in her LSE paper, manufacturing to boot.)

  8. The buisiness rates form part of the expense of renting the premises. Without them would the rent not just go up to cover the difference.

    Yes, as the government discovered with its Enterprise Zones.

  9. Noteworthy that Sainsburys boss is not aware of this. But then again Sainsburies probably own the land there shops are on.

  10. “a freely contracted arrangement that saw High Streets develop the way they did before its abolition in 1964 ”
    Shouldn’t think DBC was around to remember ’64.
    The high streets I remember of the period were where you got to buy what the shopkeepers thought it was right for you to buy, at the price that suited them. It’s no accident the “swinging sixties” kicked off round about ’64. Before then, fashion was something ordinary people couldn’t afford.

  11. DBC Reed

    “online predatory discounting which does so much damage to High Streets in the UK”

    Go on, why is that a problem?

  12. @ Ironman

    > Go on, why is that a problem?

    I’ll answer for the eejit.

    Because people find they can buy stuff cheaper online, so they stop buying from the High Street, so the High Street closes down and lots of people in unnecessary jobs are out of work, plus vibrancy, plus LVT.

  13. Given that Justin King is a successful businessman, and the Telegraph these days is a poxy rag with the journalism standards of the Independent, the error is far more likely to be in the reporting.

    I’d stick a penny to a pound King said something like “in the US, where there was an imbalance in sales taxes, they specifically addressed this issue by [blah]”, and that the Telegraph’s trained monkey has failed to notice his piece is saying something completely different.

    Dinero: Sainsbury’s owned their estate 20 years ago but have done billions of pounds of sale-and-leasebacks since then, so will be *very* aware of how rental prices, business rates and capital value relate to each other.

  14. Bloke in spain, retailers do the same now as then. Retailers decide what to stock or dropship, retailers decide what price they will charge within whatever contracts are signed.
    Whether online or in a retail high street store its the retailer deciding.
    May use market research, may use industry experts and cost systems but still retailer deciding.

  15. If taxes on bricks and mortar are unfair then how about the thieving scum of the state–both national and local crooks–abolish them?. That’ll solve it and everybody will be happy–except the thieves and parasites.
    And, apart from commies like Reed who gives a shit about them.

  16. DBC,

    Edward Heath wanted us in the Common Market despite the damage to retail

    Damage to retail? Who cares?

    Virgin went out of business because they closed at 5pm and expected me to get dressed and come to them. Guess what, Amazon is going to get my trade. We stuck them in the same dustbin of history that we put buggy whip and mangle makers.

  17. Go on, why is that a problem?

    Cos the high street then goes from being a nice place with nice shops in it to be a shit-hole full of boarded up premises.

    Now, you might argue that this problem is a cost worth paying for the availability of cheap stuff online, or that it’s not the state’s place to try to impose a solution to this problem.

    What you can’t do, and be taken seriously, is to deny that it is a problem.

    Amazing the things that classical liberalism blinds you to, isn’t it?

  18. Larry,

    Cos the high street then goes from being a nice place with nice shops in it to be a shit-hole full of boarded up premises.

    Turn the shops into housing, then. Or old people’s homes, or student accomodation, or lap-dancing clubs. Or if no-one wants it, level it and stick some more parking on it, so you can lower the price and make the remaining shops more attractive.

    We created shops because society evolved from bartering and market trading. And it’s evolving again. It’s freeing up land that we should use for some other purpose, because it ain’t coming back.

    I dunno. Or we can desperately try to keep them open. And maybe stop research into nylon because it put silk stocking makers out of business, or have protected the bakelite makers, the valve makers from the threat of the transistors and throw some lottery money at snuff box makers.

  19. “Cos the high street then goes from being a nice place with nice shops in it to be a shit-hole full of boarded up premises.”

    And why are the shops all boarded up? Could it be that because the State controls what the owners can do with their premises via the planning laws? And demands lots of expensive changes if you want to change the shops into flats? Or refuses to allow some types of retail premises to open? And refuses to reduce the business rates despite the utter collapse of the retail trade? Do you really believe that in a totally free property and business market all those shops would still be boarded up rather than be put to some sort of other use?

  20. And maybe stop research into nylon because it put silk stocking makers out of business, etc..

    The difference being that a town centre produces indirect benefits to the local community in a way that silk stocking makers don’t.

    You can deride this as sentimentality or ludditism if you like (and I don’t doubt you will) but, given that people prefer being around a nice town centre to the large car-park surrounded by strip joints that you suggest (and which is increasingly the reality) then the decline of those town centres is a negative externality in the rise of online trading.

  21. Larry,
    “people prefer being around a nice town centre to the large car-park”

    Clearly they don’t – otherwise people would flock to the high streets, and the out-of-town retail parks would be empty.

  22. I think it’s very useful to have a thriving town centre , as it makes shopping much easier. The problem is just that with online shopping taking some of the strain we need fewer high street shops than we used to, so there’s an oversupply.

    What needs to happen is for town centres to contract a bit, so we have full occupancy of a smaller area rather than partial occupancy of a larger one. This probably means having commercial premises converted into residential ones, but I think this is a bit awkward under the current planning rules.

    We therefore either need the rules relaxed to allow this, or we need local councils given full powers to force shops on the periphery to relocate to empty premises at the centre and to have the landlords of the now-empty premises convert them into something more socially useful.

    The latter has the problem that allowing market pressures to take effect takes time; the latter has no downsides (if we accept the fairly reasonable assumption that local government is omniscient, omniopotent and omnibenevolent).

  23. Big company CEOs always talk economic shite in public. Does anyone here know whether they’re any better in private?

  24. Tim Almond and Pellinor: agreed. In fact my local high street (though I prefer to call it a village centre cos we’re posh) is facing exactly that problem and the solution appears to be finding a new use. And yes, I do think the market will do that for us very well if allowed to. By contrast our local collection of snob marxist community groups have managed to make the biggest fuck up imaginable.

    Larry: “The difference being that a town centre produces indirect benefits to the local community in a way that silk stocking makers don

  25. Larry: “The difference being that a town centre produces indirect benefits to the local community in a way that silk stocking makers don’t. You can deride this as sentimentality or ludditism if you like (and I don’t doubt you will)”

    No I won’t criticise your sentimentality; makes you a nice guy. However, you are a luddite.

    Look, the reason they became high streets in the first place is because people chose to shop there; nobody sat down and though “high streets: what a jolly lovely idea that will be”. So now people s’ shopping habits have moved on and, as serendipity would have it, people need more houses. So….

  26. Larry,

    The difference being that a town centre produces indirect benefits to the local community in a way that silk stocking makers don’t.

    And we’ll still have town centres. We just need something like 15% less retail space. So, shuffle it all together and turn the bits on the outside into something else.

  27. Anyone care to take a stab at some reasons why the out-of-town shops are where they are? Is it property prices? Seems unlikely given the empty shops in town. If not, what else except transport?

    You can have all the shops you like in a town centre, but no-one will use them if they can’t get there or get their purchases home again afterwards. And, with the best will in the world, no-one purchases a wardrobe and then carries it home on the bus or the back of a bike*.

    [*Except in India, obviously…]

    I can think of a few places that, despite bbeing shit-holes, have the balance about right. Wood Green is an example. They have a shopping centre with the big box stores on the high street, loads of local parking, tubes, buses, and as a result enough traffic to keep the independents in business (such as it is). I don’t remember seeing a lot of vacancies last time I was down that way.

  28. No one has yet established that the Internet is the main cause of high street malaise. Of course, it will be having some effect but my guess is far less than thieving govts/councils/idiot regs/parking bullshit/gen business down turn cause by the scum of the state fucking the economy and stealing 50% of national income etc,etc. ad nauseum.

  29. Mr Ecks, many of the internet retailers are based here – I sell on own website, amazon and ebay along with selling at local events. No stealing of national income however I also do not have to charge the same prices for goods as a high street shop.
    People used mail order before the internet, people use the internet a lot for ordering stuff now. It is however still a minority of spending – we are providing what people want at a price they want to pay. What are the high street doing? Providing some items, queues, carrying your own shopping around, often having to pay to park and do a few hours walking to get all you want. And the shops shut when you come out of work so you can at best do your high street shopping at the weekend.
    If retailers of whateve sort, offline or online, provide what people want then they will be able to keep going. Fail to provide what people want and the competition will be glad to.

  30. Jim,

    And refuses to reduce the business rates despite the utter collapse of the retail trade?

    Quite; business rates are based on the peak valuations pre-crisis and iirc there are no plans to review until 2017.

  31. “We just need something like 15% less retail space…”
    Mmmm… Been thinking this since moving to France & finding most french towns have kept their market squares as the focus of the town centres.
    Identify which portion of the town was the original market. Bulldoze it flat. Shops, offices, flats, whatever. No compensation to the owners. The market square was the property of the town, not the council. Not theirs to sell, so buyers bought stolen goods. Bit of deterrence, make sure it never recurs.
    There’s your 15%.

  32. Buisiness rates are not a burden on retail buisiness. They come out of what would be rent. ie the revenue comes out of what would otherwise go to the landlord in rent. Come to think of it there is a clue in the name “rates”, it is on the property.

  33. Heard a manager from a successful chain of pubs on the radio a while back, talking about the record number of pub closures. Surprisingly, he contradicted the whole gist of the piece by saying that the smoking ban was not to blame, bad management was. Said that the smoking ban had changed the market and those who could manage a pub properly — which of course includes adapting — were doing fine, and those who refused to change were going bust.

    The Net is the same. My town (Bangor, NI) allows various markets to come and colonise our seafront from time to time, and those markets charge stupid money for stuff we could get far cheaper elsewhere, yet do roaring trade. Because people love shopping. Wandering around, browsing, picking stuff up and looking at it, asking knowledgeable and friendly shopkeepers for their recommendations… this is all a very pleasant time — certainly far more pleasant and usually less frustrating than shopping on the Web. Going into a dingy ill-lit shop run by sullen morons who don’t want to interrupt their chat about “Eastenders” to deal with bloody customers, not so much.

    I wouldn’t want to give the impression that Bangor is well run. The visiting continental markets are about the only thing the council get right. We also have a big patch of derelict wasteland which has remained undeveloped for well over fifteen years now. This is on the seafront, facing the marina, opposite the big free (and surprisingly pretty) car park. It should be the town centre: it is by far the best place around to build shops. Yet it’s rubble and scrub, because every time a retailer shows an interest in the site, the council contrive to drive them away with over-the-top demands and restrictions. Where would I rather shop? Amazon or a big airy department store with giant windows overlooking the sea?

    Bangor council are proposing introducing parking charges throughout the entire town. Yeah, that’ll help.

    So, yes: badly run shops sited on badly run land. If the Web didn’t exist, we’d just have thousands of pissed-off customers wishing it did.

  34. Dinero, can think of a few retail businesses locally who could disagree with you. Rent plus business rates….

  35. One unspoken assumption seems to be that the businesses that went into administration were competently run, among them HMV.

    The guys who started Play.com say they always wondered why HMV wasn’t beating them hands down. HMV had a strong brand in entertainment but it didn’t get to grips with the internet or supermarket competition.

    Apparently the MD around the time of the stock exchange listing in 2002 dismissed downloadable music as a fad, claimed people would always prefer to buy from real shops instead of online retailers and said real music, film and game fans would never buy from supermarkets. Ten years later…

  36. PJF: maybe it’s different out in the sticks, but all the Sainsburys in areas where I’ve lived have been town-centre or town-edge-of-centre.

    UKLiberty: Yup. I’ve known several people who worked for HMV (buyers, corporate marketing, and grunts on the tills), and all of them without exception would say it was one of the worst-run places on earth.

    A proper throwback to 1970s management, which only survived as long as it did because of the economic boom and by deliberately screwing over long-time staff (in the sense of concocted disciplinaries, unlawful terminations, etc) to replace with casuals on min wage.

  37. Perhaps someone will eventually try actually competing with Amazon, instead of constantly whining how Amazon won’t leave its cozy Internet to face them like men, at high noon on the high street.

  38. Forgot to say, I remember when HMV and the other businesses that went into admin were baddies for putting their competitors out of business and irrevocably changing the High Street…

    An unfortunate thing is that if a popular store closes then people are less inclined to visit the area, so one shop closure can have a knock-on effect. Apparently that’s happening in the US – JC Penney closes in a mall, other stores close because they relied on traffic from JC Penney and then you’ve got an increasingly empty mall.

    Perhaps worth noting that malls in the UK are going from strength to strength – well, Westfields are anyway. You’ve got that combination of things that young people want to do that they can’t / don’t necessarily want to get online – fashion, coffee, cakes and fast food (iow hanging out), and the cinema.

    People are beginning to look at shops as a marketing expense, not something that you’ll directly profit from. This is what the Nike flagship store on Oxford Circus is about – making its statement, showing the Nike brand, showing all the Nike goods in the Nike branded environment that Nike controls. This has accompanied the rise in ‘showrooming’ where people go into stores to look for product they then order online from the cheapest website.

  39. I must have handed over hundreds, possibly thousands of pounds to HMV over the years. For the last ten years, I’ve occasionally wandered in, looked at the prices, laughed openly, and left. I’m willing to pay a bit more for the convenience of getting it today and the experience of a nice shop. But I’m not willing to be skinned alive in a crappy shop.

    For a little while, HMV had a superb online store, where you could get some great obscure stuff and imported EPs and so on. I used that. They scrapped it for some reason.

    The mention of malls reminds me that people from the South of England routinely cross the Channel just to go shopping in French bricks-and-mortar shops. You can’t tell me that what they’re looking for is convenience. This tell us that a tax on a good online shop, if it were to effectively disincentivize people from using it, would need to be greater, per shopping trip, than the cost of travelling to France.

  40. Perhaps worth noting that malls in the UK are going from strength to strength – well, Westfields are anyway.

    For the reason you cite, plus one other major one: you can escape the weather. The same is true in Russia and Dubai.

  41. squander two,

    Heard a manager from a successful chain of pubs on the radio a while back, talking about the record number of pub closures. Surprisingly, he contradicted the whole gist of the piece by saying that the smoking ban was not to blame, bad management was. Said that the smoking ban had changed the market and those who could manage a pub properly

  42. squander two,

    Heard a manager from a successful chain of pubs on the radio a while back, talking about the record number of pub closures. Surprisingly, he contradicted the whole gist of the piece by saying that the smoking ban was not to blame, bad management was. Said that the smoking ban had changed the market and those who could manage a pub properly – which of course includes adapting – were doing fine, and those who refused to change were going bust.

    That’s ridiculous. The fault of the pub closures from the smoking ban is the smoking ban. If it hadn’t happened, they’d still be in business.

    It’s like blaming someone who gets robbed at knifepoint for not taking out self-defence classes.

  43. Hey, the man was making a good living as a successful pub manager. You think it’s bollocks, don’t shoot the messenger: go to a thriving pub and tell them they shouldn’t be.

  44. john b: If only I lived out in the sticks; unfortunately a town seven miles between two cities is my lot. Of the general area, two Sainsburys (supermarket size) might be counted as in-town, the other five are firmly out in retail parks.

    Even though my comment wasn’t entirely serious, I think a general point about supermarkets damaging the “high street” is fair. That controversy has been around as long as I can remember, which is a disturbingly long time.

    The “high street” itself was once a novel concept that outmoded a previous trading approach. There is no reason it should be protected against more successful developments.

  45. SquanderTwo,

    I’m not saying he shouldn’t be successful. I’m saying that his analysis of the causes of pub closures is assuming that only management is a factor, when the distribution of pub closures shows that location and the type of trade have an effect.

    Pubs in working-class areas that have regulars that want to go out for a drink are not getting as many of those regulars. They are switching to drinking at each other’s houses, or just not going out. So, that has a greater effect on estate and rural drinking pubs than on town centre pubs where people use them either as a place to visit after work, or else to go out on the prowl.

  46. Pingback: FCAblog » Is it ethical to lie?

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