Retail figures UK-wide have been markedly upbeat of late – booming “Black Friday” sales and October recording the sharpest rise in retail sales for 14 years.
But retail Scotland has not been sharing this buoyancy. The sector has been struggling with the continuing squeeze on household budgets, higher business rates and imposts such as the Apprentice Levy.
However, is the gloom being overdone? The weekend brought reports that highlighted Scottish government figures showing that the total number of jobs in the retail industry in Scotland has fallen over the past year, by almost 1,100.
Over the past two years it has fallen by almost 5,000 jobs.
The figures carried in the Businesses in Scotland 2016 report and picked up by the Sunday Times Scotland, show that the total numbers employed in the retail sector have fallen from 257,030 in 2014 to 252,400 in 2016.
Scottish Retail Consortium Director David Lonsdale comments that “retail remains Scotland’s largest private sector employer but these new figures graphically highlight the impact that profound structural, economic and regulatory change is having on the industry.
“This is being driven by changes in shopping habits, stiff competition, and burgeoning government-imposed regulatory costs including the new national living wage, apprenticeship levy, and escalating business rates.
“Added to the mix now is a halving in the projected growth rate of consumer spending over the next couple of years, as rising inflation, increased statutory employee pension contributions and – here in Scotland – higher council tax take their toll.”
Grim indeed. And the plight of Scotland’s retailers is real and not to be denied.
But there is more to retail than high street presence – vital though that is for the health of our communities.
By far the biggest change in consumer habits in recent years has been the explosion in online spending. The average weekly spending online in October 2016 was £1 billion, up by 26.8 per cent compared with October 2015
The amount spent online accounted for 15.2 per cent of all retail spending, excluding automotive fuel, compared with 12.7 per cent in October 2015
Last year online sales grew by 16.2 per cent and is set to grow by a further 14.9 per cent this year. More than three quarters (77 per cent) of UK Internet users made a purchase online in 2015.
The online share of retail trade is also on the rise: while it only represented 13.5% in 2014, it is expected to rise further to 16.8% in 2016.
The average online order value last year stood at £78.74. Amongst the most popular product categories for consumers are clothing, books and home electronics.
Does the surge in online shopping to a billion pounds a week destroy jobs? It has certainly caused an employment shift – fewer staff numbers in shops, for example.
But many more are employed in website maintenance and servicing, order processing, credit checking, warehouse distribution, packaging, fleet hire and van delivery.
All the evidence points to the fact that shoppers are not spending less – but spending differently. And that has led to job creation elsewhere – not immediately visible, but retail-related nonetheless.
Many lament the loss of long standing household name companies such as Woolworth, Austin Reed, Dewhurst, Fine Fare – and more controversially British Home Stores.
Ailing retail models, under-investment, yesteryear product- all and more have contributed to an apparent loss of retail activity.
But many names have been acquired by other retailers, new names have popped up to cater for our insatiable appetite for variety, innovation and the new. That is why consumers have been spending more than ever – and no more so than online.
Many in the retail industry have responded by refining their business models and employing fewer people. However, those roles which remain are expected to be higher skilled, more productive and better paid.
This shouldn’t weaken David Lonsdale’s message that MSPs should “be wary about adding further to the pressure on household disposable incomes, and should firmly knock on the head any notions about using their new powers to increase income tax rates for the vast majority of Scots.”
The SRC expects the Apprenticeship Levy to cost retailers in Scotland circa £12 million a year, starting in April. The doubling of the Large Business Supplement started earlier this year and affects 7,500 retail premises in Scotland, and is estimated to cost retailers in Scotland circa £15 million a year.
Not good, particularly given worries about the loss of amenities in challenged town centres across Scotland…