What: Changes to business rates will significantly increase costs for department stores and supermarkets, threatening their role as high street anchors.

Why it is important: Increased costs for anchor tenants could accelerate high street decline, echoing recent warnings from major retailers and industry analysts.

The upcoming changes to business rates, including a new surcharge on properties with a rateable value of £500,000 or more, are poised to hit department stores and supermarkets the hardest. These businesses, which serve as vital anchors for the high street, face substantial increases in operational costs, with research indicating up to £482 million in extra annual charges for physical retail, leisure, and hospitality premises. In contrast, online retailers and distribution warehouses will see a much smaller impact, undermining the policy’s stated goal of levelling the playing field. Experts warn that this blunt approach risks penalising the very businesses that drive footfall, employment, and economic activity in local communities. The policy, intended to support smaller retailers, may inadvertently weaken the broader retail ecosystem by destabilising its largest contributors. As supermarkets and department stores absorb these additional costs, the viability of their high street presence—and the health of surrounding local economies—could be jeopardised, raising concerns about the future of physical retail in the UK.

IADS Notes:

The risk posed by increased business rates to department stores and supermarkets is underscored by Frasers Group’s July 2025 warning that a £1.7 billion hike could halt store expansion, and by Primark’s November 2024 demonstration of anchor stores’ crucial economic impact. The government’s April 2025 review of customs thresholds aimed to address online competition, but recent muted growth and revenue losses in London’s West End, reported in February 2025, highlight the broader consequences of policy shifts that fail to support high street anchors.

Department stores hit hardest by UK business rates shake-up