THE reason for the collapse of Beales department stores, along with other symptoms of failure of retailing, is clear. Too many shops. A problem building up for 50 years.

Very simply, expansion of retail selling space has been ever-increasing. Every town redeveloping its town centre, while every property developer in the business has been pouring money into out of town shopping centres with huge (usually free) car parking.

Life assurance companies viewed the income stream from rentals as being an assured source of revenue to back the “with profits” life assurance policies they sold for years until about the year 2000, when such policies went into collapse.

The simple fact is that far too much retail space was created. Every retailer imagined that they could drive up retail profit margins incessantly, in no small part thanks to the abolition of Retail Price Maintenance (RPM) in Parliament in 1964. Before then, many consumer goods were sold at a price which was fixed by the manufacturer. Manufacturers clearly had an interest in keeping prices low to maximise sales, and it followed, retail profit margins low as well. This had been to the advantage of the consuming public. It also meant that there was a restraint on excessive numbers of shops. Sadly Parliament and the then Prime Minister, Edward Heath failed to appreciate that.

Profit margins increased, numbers of shops increased and now, due to the fact that those margins are so high, direct sales and distribution of everything imaginable is taking over.

In the process, it is inevitable that shops will close by the thousand, and the total amount of retail selling space will have to fall.

Greedy councils, who have seen roadside parking charges as an easy way of making big money, have aggravated the problem. After all, whoever would want to pay £2.50 per hour for parking to shop in Bournemouth, when we can go to Castlepoint, find all the parking we need, free of charge and shop without worry about receiving an extortionate fine for overstaying our time limit at the roadside?

Town centres will die for shopping, just as they have in the USA. Too much investment has been made in retailing and not enough in manufacturing. This has led to low-paid, low-skilled jobs in retailing and not enough in high value added manufacturing. Now, of course, the price will be paid in massive closures of shops and changes in distribution, which is now there for all to see.

Low paid shop assistants are now being replaced by low paid van drivers delivering direct from warehouse to the home, thus causing massive extra traffic and reducing mileage travelled by private cars for shopping. Pressures on consumers’ time now are such that buying online is the new future in retailing.

The fact is that the UK retailers have expanded their gross retail profit margins and selling space to suit their ever expanding ambitions, resulting in misallocation of resources, poor labour productivity in badly paid jobs, waste of capital and higher prices. The correction will be painful.

I suggest that a solution might be closure of unnecessary shops and relocation of the land to much needed housing. Also, abolition of rates on shops and factories with an increase instead on VAT which will apply to imported goods which now provide little tax benefit to the economy.

However, the present rates system does have the advantage of reducing the vast number of surplus shops.

Maybe the loss of Beales and other town centre shops could provide low cost housing to the homeless of Bournemouth. A better use of resources!


Brackendale Road, Bournemouth