The UK’s high streets have long been the heart of local communities, but today, they face unprecedented challenges. From rising business rates to the dominance of online retail, small businesses are under pressure like never before.
To ensure the long-term sustainability and vibrancy of these high streets, we must rethink how they operate.
Reforming the business rates system, supporting entrepreneurs, and fostering innovation are critical steps in levelling the playing field for SMEs and ensuring that high streets remain thriving hubs of economic and social activity.
Covid-19, Online Shopping and Digital Innovation
The shift towards digital marketplaces, accelerated by the COVID-19 pandemic, has led to a decline in footfall, making it harder for physical stores to compete and thrive.
One of the most pressing issues on UK high streets is the high vacancy rate of retail spaces. The departure of major stores has left many high streets with empty store fronts, which not only detracts from the appeal of these areas but also creates a negative feedback loop that further reduces foot traffic.
For micro and small businesses, this situation is particularly dire as high rents and complex tenancy agreements compound the financial pressures they face. Many micro and small businesses are struggling to stay afloat, especially in a retail environment that is increasingly dominated by online competitors, or franchised corporations.
The growth of out-of-town retail parks and supermarkets has also diverted trade away from UK high streets.
These developments offer convenience and variety under one roof, attracting consumers who might otherwise shop locally.
This shift has significantly impacted high street businesses, leading to further declines in footfall.
Additionally, infrastructure and accessibility issues—such as inadequate parking, poor public transport links, and a lack of electric vehicle (EV) charging facilities—deter visits to high streets and diminish the overall shopping experience.
The current situation
The UK high street faces significant hurdles, notably in terms of business rates and payment delays.
Despite the introduction of a temporary business rates support package in November 2023, which extends a 75% rates relief for eligible retail, hospitality, and leisure properties until March 2025, industry leaders argue this is only a short-term fix.
The increase of the standard business rates multiplier by 6.7% underscores the urgent need for a more comprehensive reform to modernize what many see as an outdated system.
The proposed solutions
1. Reforming Business Rates: A Fairer System for SMEs
Business rates have been a persistent burden for small businesses on high streets, often putting them at a disadvantage compared to larger, out-of-town retailers and online giants. To create a fairer competitive environment, it’s essential to overhaul the current business rates system.
Let’s think of a small independent bookshop in London. Faced with high business rates, the owner struggles to keep up with rising costs while competing with larger chains and online retailers who benefit from more favourable tax conditions.
By expanding Small Business Rates Relief (SBRR) and ensuring a more equitable distribution of rates across different retail environments, we can provide much-needed financial relief to small business owners like this, enabling them to reinvest in their businesses and grow.
According to a report by the Federation of Small Businesses (FSB), over 40% of SMEs identify business rates as one of their top concerns, with many citing it as a barrier to growth. Reforming this system could directly impact the survival and success of countless small businesses across the UK.
2. Pop-Up Shops
Attracting and supporting new entrepreneurs is crucial to the future of UK high streets. These entrepreneurs bring fresh ideas, innovation, and energy, but they often face significant hurdles, such as access to funding, mentorship, and affordable retail space.
Local authorities should prioritise initiatives that provide new business owners with the resources they need to thrive.
For instance, offering grants or low-interest loans to startups, creating incubator programmes that pair entrepreneurs with experienced mentors, and providing digital skills training can help bridge the gap between ambition and success.
In addition to that, a solution is the promotion of pop-up shops and temporary spaces to fill vacant units on UK high streets.
This is not something the UK is not used to. On the contrary! Consider the success of the “Pop-Up Britain” initiative, which offered temporary retail spaces to small online businesses looking to test the high street market.
This initiative not only provided entrepreneurs with valuable experience and exposure but also brought fresh, unique offerings to local high streets, attracting new customers and revitalizing footfall. More of these initial
3. Innovating High Streets: Beyond Retail
Government funding initiatives have also been crucial in supporting high street regeneration.
Programmes such as the Future High Streets Fund and the UK Shared Prosperity Fund (UKSPF) are designed to help local communities adapt to changing retail landscapes.
These funds provide essential financial support for infrastructure improvements and business development, helping to lay the groundwork for the long-term sustainability of UK high streets.
Most importantly, however, is the realisation that by allowing for more adaptable use of vacant shops, local authorities can help small businesses respond more effectively to market changes.
The future of UK high streets lies not just in selling goods but in becoming vibrant, multifaceted community hubs. By integrating retail with leisure, culture, and social activities, high streets can attract a broader range of visitors and offer experiences that cannot be replicated online.
Look at the success of an award-winning Altrincham in Greater Manchester.
Once struggling, this high street transformed by focusing on local food markets, independent retailers, and community events. The combination of unique shopping experiences, dining, and cultural activities has turned it into a bustling destination, drawing people from across the region.
4. Digital Innovation
Digital integration and innovative solutions to compete with a changing consumer become a vital component of the survival strategy for small businesses on UK high streets.
As we reiterated multiple times, by leveraging digital platforms, these businesses can enhance their reach and integrate their physical presence with online operations.
This hybrid model allows small businesses to compete more effectively in both the physical and digital realms, ensuring they remain relevant and accessible to a broader customer base.
The path ahead: what can be done
As an SME entrepreneur, your voice and actions are crucial in shaping the future of UK high streets. Here’s how you can get involved:
- Advocate for Reform: Engage with local business associations and councils to push for business rates reform that benefits small businesses.
- Leverage Available Resources: Seek out funding opportunities, mentorship programmes, and digital skills training to enhance your business’s capabilities.
- Collaborate Locally: Partner with other local businesses, community groups, and local authorities to create events and initiatives that draw people to your high street.
- Innovate Your Offerings: Think beyond traditional retail—how can you incorporate leisure, culture, or community activities into your business model to attract more visitors?
The future of UK high streets hinges on our ability to create a sustainable, competitive environment that balances the needs of businesses, consumers, and local communities. By reforming business rates, supporting entrepreneurs, and innovating high street offerings, we can ensure that these vital economic and social spaces not only survive but thrive in the years to come. SMEs have a central role to play in this transformation—let’s work together to make it happen.
