Uncertainty over jobs and income plus the later time of Easter have had an impact on retail in Scotland, causing the worst drop in sales since 2000.
Why are we talking about it now?
Last week the Scottish Retail Consortium (SRC) revealed that Scottish retail sales dropped 3.9% on a like-for-like basis in March, making it the worst drop since January 2000. Total retail sales fell 0.3% - the first fall in total sales since the survey began in 1999. The SRC said the “underlying uncertainty about jobs and incomes, as well as the later Easter” took its toll.
How important is retailing to the Scottish economy?
The Scottish retail industry employs 245,638 people - one in nine of the workforce. 9.8% of enterprises in Scotland are retailers, with 14,155 VAT-registered retail businesses operating out of 23,825 outlets. More than a third of consumer spend in Scotland goes through shops.
What are the challenges of operating in Scotland?
Scotland has a densely populated central belt, with large regional centres including Glasgow and Edinburgh, but sparsely populated regions elsewhere. This throws up challenges around distribution and logistics, but these issues are “well-known and well-managed”,according to SRC director Fiona Moriarty.
Broadband take-up in Scotland is lower than the UK average, posing a problem for online retailers. Ofcom figures show a 61% take-up of broadband in Scotland, compared with the UK average of 75%.
How does policy affect retailing in Scotland?
Since devolution, retailers in Scotland have seen “more and more legislation that has a direct impact on retailers”, says Moriarty. Legislative changes have included the banning of promotions and multibuys on alcohol and tobacco.
In February, the Scottish government had plans to impose a levy on stores with a rateable value more than £750,000, which would have increased business rates by up to 30%. However, after opposition from retailers, the Scottish parliament voted to block the levy.
How do Scotland’s retail sales compare with the UK average?
Up until about 18 months ago Scottish retail sales outperformed the UK average. But the situation reversed as Scotland began to be more affected than the rest of the UK by the downturn. Scotland has “traded consistently below the rest of the UK” ever since, according to Moriarty, who says this should worry the incoming Scottish government due to be voted in in May. She says Scottish consumer confidence has dipped more than in the UK because of the large reliance on public sector employment.