Thursday, 29 November 2007

Endangered species

Most of us live in towns, it is has been the favored human environment for many years, and it think we have reached the point where our species needs its environment protecting.

Apart from any consideration about our social needs as a species, road travel to shops, jobs, leisure facilities, schools etc. isn’t environmentally sustainable.

As a retailer I am in a position to explain why the shops are going in our towns, my brother recently closed his bookshop in St Albans and now my father has closed his in Wimborne Minster and I have noticed a lot of shops are closing here in Ramsgate.

When I moved back to Ramsgate 20 years ago King Street was a much busier street and Ramsgate had a lot more shops and places to park it also had leisure facilities to atract tourism. Back then the shop takings were about £1,500 per week or £75,000 per year as the town disintegrated as a leisure and shopping town this figure fell at its worse to about half. It has now gone back up a certain amount to about £1,000 per week or £50,000 a year. Unlike many other retail businesses, in the secondhand book world one is able to compensate for these sort of fluctuations a certain amount, by when the shop is quiet using the time to engage in postal business which although much more time consuming, is more profitable.

Now we and the other shops have a new problem because most shops are rented on long leases, the rents tend to stay fairly stable for long periods of time until the leases come up for renewal. 20 years ago the building I rent was worth about £25,000 and the rent was about 10% of this freehold value, this is all usual practice.

Now however this building is worth about £200,000 maybe more, this wouldn’t be a problem if the planning regulations meant that it had to stay a shop, as I doubt that any other type of shop in this building would do much better, so the rent, rates and ultimately the value of the building would have to reflect what it could make as a shop.

10% of £200,000 is £20,000 per year or £400 per week converted into 4 flats with rents in the region of £100 per week it would easily generate that sort of income for the landlord. The gross rate of profit for bookshops shop sales is generally in the area 40% if it is very well run it might be possible to get 50% but not very likely and this applies to most small shops where the initial discount on what they buy to sell varies between 20% and 50% as of course not all the stock one buys sells for the amount one hopes for.

Our average book selling price is about £2 which means we buy and sell about 500 books a week, a lot of books all re used the majority of which would otherwise been thrown away.

So the bottom line is the very best the shop is likely to make to pay all of the expenses rent, rates, heat, light etc is about £500 so you can see with a rent of about £400 per week and business rates related to this figure, it’s not worth a candle.

1 comment:

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