Traders have revealed fears that independent shops in Cardiff city centre could be facing a "death sentence" amid an onslaught of difficulties. We have spoken with four small business owners who feel the shopping area is under threat.
The shop owners have been struggling with business rates, wholesale prices, and energy bills. They also pointed to customers' difficulties getting into the city centre as well as long-lasting harm wreaked by the coronavirus pandemic.
One of those considering his shop's future is Yogesh Patel who has run the Beauty Lounge boutique in Queens Arcade for a decade. In recent years the shopping centre has been increasingly dominated by empty units. The Gorilla War Wear clothing store and Miss Petals haberdashery are among the latest businesses to have left the complex.
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Mr Patel confirmed Beauty Lounge's other branch, which is in Queen Street, will close in early 2023 – and he fears it could soon no longer be viable to keep the Queens Arcade shop open. "It is under a big threat," said the 38-year-old who runs the business with his wife Bhumi. "We already had thoughts of how long we can survive this. In the near future we are thinking of completely shifting to online."
One of the biggest challenges is the business rates system which, Mr Patel says, fails to reflect the damage caused by Covid and online competition. "Rental value has gone down miles. Rents have been slashed by more than half, so property owners are helping, but the government is not setting business rates that reflect the real value. People can afford the rent but they can't afford the rates. It's just not matching up."
The Valuation Office Agency, on behalf of the Welsh Government, sets the rateable values that determine business rates. The Welsh Government has confirmed the next financial year's rate relief for shops will rise from 50% to 75% to help with higher costs but Mr Patel says the underlying problem is the rateable values themselves, which are set to drop by an average of only 10% over the next year across stores in Wales.
Mr Patel described the rateable value of his Queen Street shop as "a killer" at £69,000 while the Queens Arcade branch is at £27,500 – meaning yearly rates of around half those figures before relief. Even though the upcoming year's relief will give a "breather" Mr Patel believes it will only delay the inevitable unless the valuation system is "overhauled". He added: "After the 75% ends I think there will be shutdowns everywhere."
Beauty Lounge's monthly electricity bill has risen from £300 to £1,000 and the wholesale price of hair extensions increased by 18% in November alone. The business' wage bill is around £5,000 per month.
"You can't compete with online," said Mr Patel. "The outgoings here are so high. We were trying to hold off on putting up prices. In the last two years we've had five wholesale price rises and we could only pass on a little bit to the customer. We have taken the hit because otherwise people will just go online."
The decline of Queens Arcade has seen a vicious cycle of reduced footfall and shops closing. "It is sad," Mr Patel added. "Since Argos went a few years back it has gone downhill. The Post Office was gone before Covid. All the big retailers are leaving."
Matthew Lasebikan is six years into a 10-year lease on a unit at the Capitol Centre – an even more beleaguered shopping complex than Queens Arcade – where he owns the Falafel Corner café. He does not expect to renew when the lease expires.
For years the Capitol has harboured almost as many disused spaces as shops but when the 46-year-old opened Falafel Corner there were proposals for a redevelopment led by leisure and restaurants as well as a tower of 100 flats above. More recently there have been plans for a food hall to revive the shopping centre but Mr Lasebikan fears there will be more disappointment.
"When I first came in they showed us a prospectus of high-rise flats and nothing materialised," he said. "I have four years left and I will be surprised if anything happens in that time. I pay a service charge of £1,600 a quarter and they haven't opened the toilets since Covid. Customers ask if they can use the toilets and we are the ones who have to tell them they can't."
Mr Lasebikan, from Roath, believes heavy weekday footfall is in the past for the city centre after office workers' habits changed with Covid. "The way the council runs the centre and the way businesses in the centre are taxed needs to change," he said.
"Lower business rates would help considerably but there is a much wider issue. It's wholesale food prices, it's wages that allow staff to deal with inflation. We charge £5.85 for a Lebanese wrap and before Covid it was £4.95. It's not fair to keep passing costs onto customers."
The business owner supports green policies like bus and cycle lanes but he feels recent transport changes in the city centre "don't seem very thought-out". He gives the example of traffic passing Queen Street station no longer being able to turn right into the Capitol car park.
"That car park used to be really busy," he said. "Now people have to spend 45 minutes in gridlock to come back round from St David's 2."
Mr Lasebikan also questioned the new bus lane in Castle Street. "It starts and stops twice in 100 yards so you've got traffic going back in and out. It's not fluid. Traffic has got to flow."
The Capitol and the east end of Queen Street are filled with coffee shops and empty premises but Mr Lasebikan thinks targeted rate relief could help diversify those struggling areas. "They could be specific about the parts of the city centre they want to rejuvenate," he said. "If they wanted more retail in those places they could take away business rates on retail. It would be nice to see more clothes shops and boutiques."
Heriberto De La Cruz Diaz has opened eight businesses – mainly barbers and cafés – in Cardiff in little more than three years. The 36-year-old says it is unlikely he will have to close any of them but their future is still "under threat" from rising costs and business rates.
He showed us a Cardiff Magistrates' Court notice ordering that he pay this year's £16,863 rates bill for his Bonnie and Clyde barber shop in Queen Street. The warning states that if it remains unpaid Mr Diaz will have to cover the costs of a bailiff. But he says he still has hope he can change the authorities' position by "fighting for fair treatment".
After getting full relief from rates during the pandemic Mr Diaz believes it is unfair on small businesses that the support has dropped to 50% amid rocketing costs. He welcomed the news that next year's relief will rise to 75% from April but he has called on the Welsh Government to review the current figure. "We are very grateful but it should be happening now," he said.
Speaking about footfall on weekdays Mr Diaz added: "In the high street we don't have the office workers anymore. It's 20% of what it was before Covid. I think it will come back but it will take years. The rates are a death sentence for small businesses."
Across all his businesses – which include Medusa Barber in Queens Arcade and Stag Coffee in Cathays – Mr Diaz estimates his "crazy" rates this year came to more than £30,000. He says many of his friends who trade in the city centre are having to close their shops, which has inspired him to set up an association called Small Independent Business Wales to help traders and campaign for more support.
Johance Quijada, who runs the Queen Pepiada food truck in and around Cardiff, says the economic climate has affected mobile operators as well as brick-and-mortar businesses. "Cooking oil is very expensive," said the 45-year-old who specialises in the cuisine of his home country Venezuela. "Energy bills are up 60% or more. Petrol – oh my God.
"I really enjoy what I do but it is very expensive for me to move the van. The people who organise food festivals are charging higher fees because of their own costs."
Mr Quijada, who has lived in Cardiff for 16 years, worked in a factory before starting his business about five years ago. "After the first time I worked in the van I called about my old job on the Monday morning and said: 'I am not coming back.' I thought I was not going to have to worry about money again. Then Covid happened and then the price of everything went up."
The Queen Pepiada regularly pops up at Canton's Corporation Yard and Cathays' Sticky Fingers but he believes the council could make the city centre more vibrant by allowing food trucks like his to operate. Looking across Queen Street he said: "The council says you can't park here even once a week because it's not fair to Greggs. You get a map of where you can park and it's nowhere central – only roads that no-one passes. Imagine how good it would be to have lots of different food trucks here."
A spokesman for Cardiff council said the city centre's overall footfall was "very similar" to levels in 2019 and "significantly higher" in Queen Street, High Street, and St Mary Street. They added that the council was putting in place a transport system to "cater for all modes of transport and not just the private car".
"On Station Terrace safer crossing points are being installed with wider pavements for pedestrians to use to access bus services, Queen Street train station, and public car parks," the spokesman said. "The restriction to general traffic on Station Terrace is necessary to support 84 buses that use this route per hour to access the city centre from the east and the north of the city, providing a vital transport link for over 25,000 passengers a day. In addition there are over 200 off-street private parking spaces directly accessed from this street. Any further traffic using this route would directly impact the bus services.
“We have tried to balance the impacts to both residents and businesses, and as a result we are proposing a new right turn directly from Adam Street from the south into Churchill Way. This will improve access to the Capitol car park and other premises off Churchill Way.
“The temporary traffic scheme that is in place on Castle Street allows through traffic to use the route, along with cyclists and buses, while ensuring that the limit values for air pollution are complied with on this street. This follows a legal direction from Welsh Government to reduce the levels of nitrogen dioxide on Castle Street in the quickest time possible. As the strategic cycling network expands this cycleway will play an important role to interconnect the cycle network from the east to the west of the city as well as a dedicated bus lane on this street for travel by bus.
“Finally, while the council accepts the positive contribution that street food and pop-up food trucks can have in the city centre, they do operate with relatively low overhead costs and we have to be mindful that restaurants and cafés operate in the city centre as well and these businesses pay rent and business rates.”
A spokesman for the Welsh Government said it was in the early stages of "reforming" business rates including a proposal for more frequent revaluations. The most recent came in 2017. The government vowed to review rates relief schemes to "ensure they’re delivering support in the most effective way".
“We appreciate how difficult recent years have been for businesses," said the spokesman. "During the pandemic we provided £2.2bn of support and over the next two years we are providing a further £460m which will provide additional rates relief and support businesses with the pressures of inflation
“As we continue our economic recovery it will be crucial to find a balance between ensuring revenue is collected to fund the local services we all use and securing a fair and sustainable contribution from businesses... As we consider further reforms we will work closely with business representatives as we seek to achieve a fair, sustainable system.”
A Valuation Office Agency spokeswoman said: "We are very conscious of the difficulties the current economic circumstances present to many businesses. Rateable values reflect open market rental values at a fixed date. The valuation date for the 2023 revaluation is April 1, 2021, and rateable values will reflect the impact that the Covid-19 pandemic had on the market at that time. Valuations also depend on a wide range of factors – for example a property’s location and its physical attributes."
When we raised Mr Lasebikan's concerns over the Capitol Centre its owner NewRiver offered the same response it gave nine months ago following questions about its vision. "As we have previously said our planned transformation of the Capitol Centre marks a really exciting juncture for this part of the city," said a spokesman. "We are making good progress behind the scenes and are having conversations with some great operators but at this time all leasing matters are confidential. Therefore we are unable to comment any further."
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