Scotland’s retail industry is dynamic and diverse. It accounts for 245,000 jobs, 13% of commercial investment, and provides routes to market for domestic producers. Many of our indigenous retail brands are market leaders and millions of Scots benefit from a quality retail experience every day.
There is a lot to shout about. Indeed, there has rarely been a better time to be a shopper in terms of choice, convenience and prices. The flip side is these are testing times for retailers, with conditions the toughest in a decade, with larger stores and retail chains often feeling it most.
Changing shopping habits and the cumulative burden of higher taxes and regulation is making life difficult for retailers, exemplified by business rates being at a 20-year high. Recent market data underscores the challenge, with countless household brands having stumbled or tumbled over the past two years.
Responding to these profound structural and market changes requires substantial outlays from retailers’ on ICT, a highly skilled workforce, and revamped logistics.
The new Prime Minister’s visit to Scotland provides a great opportunity to listen to firms and to think afresh about the government’s approach. Retail has leapt up the political agenda and the industry hopes our new Prime Minister hits the mark with his promised ‘economic package’. But what should be in it?
Breaking the Brexit gridlock and delivering a lasting tariff and friction free trade deal with the EU is paramount. It would help retailers keep down prices and ensure shoppers continue to have the widest possible choice on shop shelves. For example, grocery retailers will find it hard to maintain the quality, price, and durability of fresh food without a trading arrangement with key continental suppliers.
Confidence must also be injected back into the economy. Concerted action is required to help consumer spending take wing, reduce the cost of doing business, and stimulate commercial investment.
Wage-related outgoings account for the largest business cost facing retailers. Greater visibility is required over the future direction for minimum wage rates, with economic conditions and affordability taken into consideration.
The apprenticeship levy falls woefully short of what is needed to support higher skilled, more productive retail jobs. Here in Scotland it is little more than an employment tax.
UK Ministers should join with us and their devolved counterparts in producing a retail strategy. A more coherent policy approach is crucial as new powers are repatriated to Holyrood and Westminster following Brexit.
Despite the headwinds, retailers are becoming more customer focused, productive and fit for the future. We hope the Prime Minister will act swiftly to support the industry and its successful reinvention.
By David Lonsdale, Director, Scottish Retail Consortium