UK designers are on a roll, but their nurturing grounds on the UK's high streets are going down like ninepins. Paul Turner-Mitchell wants action on business rates and credit insurance
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The British Red Cross charity shop off Kings Road, Chelsea. Fashion indies are not flourishing, even in this most famous of UK boutique streets. Photograph: Rex Features
The view from the top of the British fashion food chain has never looked more commanding. From the moment Kate Middleton stepped out of a vintage Rolls Royce Phantom last year in an exquisite Sarah Burton ivory satin and lace wedding dress to the closing ceremony celebration of our nation's top designers at this summer's London Olympics, British fashion has been riding the crest of a giddy export wave.
But while the likes of Stella McCartney, Vivienne Westwood, Victoria Beckham and Christopher Kane are enjoying global acclaim as part of a sector that's worth £20.9billion to the UK economy, further down the line the all-important ecosystem that feeds this success is under serious threat.
Stella McCartney: doing well, but where's the next generation going to learn its trade? Photograph: Eric Ryan/Getty Images High fashion might be booming, but high street fashion indies are fighting for their lives. In the first six months of this year alone almost 1,000 fashion independents have closed their doors for the last time according to the Local Data Company.
Long seen as space where star designers of the future are nurtured, as well as bringing diversity to counter homogenous high-street looks, high street fashion boutiques have been lashed by the harsh winds of recession.
Mixed clothing indies have been the hardest hit, shrinking almost 4% in the last six months with the damage extending as far as some of the most fashionable streets of London. On Kings Road, for example, the elegantly dressed mannequins that posed in the window of Mimi are no longer there. Only empty fittings and bare walls are on show at the recently closed boutique that had been open since 1997.
In the street with the richest history of style in the UK you're more likely to see a frozen yoghurt shop open than a fashion boutique these days.
For many in the industry the disconnect between a fragile high street ecosystem and the success of UK fashion powerhouses suggests big problems in the longer term.
There are some in Government starting to recognise this, including the Business Secretary, Vince Cable. Earlier this year, he admitted to Drapers magazine that his department did not take fashion "seriously enough" as an economy boosting sector. The Government, he conceded, "has an obligation to support it".
That was nearly six months ago and, as the situation on the high street continues to worsen, these warm words have yet to translate into meaningful action.
Rochdale's Co-op Pioneers. Business rates and credit insurance would have challenged even them. Photograph: Hulton Archive/Getty Images Some of this is down to the fact that Government has failed to grasp what the central problems are. Grant Shapps' obsession with competitions and golden tickets – the alarmingly titled Future High Street X-Fund being the latest manifestation of this craze – has blinded the public, media and politicians alike to the serious policy challenges that need to be tackled.
The decline of fashion indies isn't just down to tough trading conditions. Unfair business rates and a credit insurance crisis are the real ball and chain making recovery almost impossible.
Putting aside for one moment the fact we've seen business rate increases of more than half a billion pounds in the last two years for retail, it's the massively unfair variations that are compounding the misery for high streets.
Business rates for an ASOS distribution centre in Barnsley, for example, are calculated at £40 per square metre. Yet for a shop in Rochdale shopping centre they work out at £1,080 per square metre. It's this flawed and out of date business rate model that's making it impossible for some independent shops to compete.
Both examples are of retail businesses competing for the same pound. But while one operates from an online platform the other competes on the high street – and yet there are huge differences in operating costs so far as business rates are concerned.
As long as the dinosaurs at the Valuation Office Agency are creating rateable values on high streets in a way that's totally out of kilter with market prices and comparable sites in other areas, the operating costs will continue to punish fashion indies to the point where they're forced to call it a day.
But if business rates continue to be a slap in the face for traders on the high street then calamitous changes to credit insurance represent a near fatal blow to fashion indies.
Brands rely on credit insurance to protect them in the case of their stock being caught in the supply chain when a small business goes under. In recent years we've seen a massive withdrawal of credit insurance to brands, which, in turn, has radically changed the relationship between brands and independent stockists.
Grant Shapps. His high street gimmicks are not enough. Photograph: Ray Tang/Rex Features Because a loss of credit insurance leaves brands exposed, the credit terms they offer to indies have been drastically altered, putting huge pressure on cashflows in small businesses already run on very tight margins and without access to finance from their banks.
Earlier this year I was involved in research on the changes in credit terms to almost 300 fashion indies across the country. We found that nearly 80 per cent of respondents had seen their credit terms change within the last 12 months and with nearly two thirds now having to finance stock purchases up front through personal savings and almost half using their own credit cards.
At the time Roger Wade, the creator of Boxfresh brand and director of Boxpark, was one of a number of industry voices to note that this was unsustainable. He said:
If more and more independents have to fund their businesses through personal means they're going to fail.
Small business owners just don't have deep enough pockets to do this and without credit there will be more business failure. If credit insurers continue to remove levels of cover then things are going to get a lot worse. I hate the phrase 'government intervention' because I don't like government interfering in private business but I think it's the only option now.
I subsequently went to meet policy advisors from Vince Cable's department to talk about this. Several months later I was informed they had met just a single credit insurer who told them retail was a difficult sector. Government, it would appear, shares this position and takes the view that standing back and observing a steady decline is the least difficult option.
What's becoming more obvious where retail policy is concerned is that there's a crying need for some strategic heavy lifting from Government. From the radical reform of business rates to getting credit insurers around the table to ensure stock flows, these are the issues that will determine the future for fashion indies on the high street. There's been too much lightweight, headline-seeking activity around high streets for too long. It's time ministers put their hands in the chalk bucket and got a grip.
Paul Turner-Mitchell owns Rochdale's 25 Ten boutique, writes columns for Drapers and Retail Week and contributed to Mary Portas' high street review. He was recently included in the Drapers 2011 top 100 Powerlist as one of the most influential people in fashion.