Business

David Lonsdale: Retail needs help as it embarks on long road to recovery

This year has started off immeasurably better for Scotland’s retailers than was the case in 2021.

At first blush that sounds surprising. After all, current trading conditions are hardly rosy. Retail sales and shopper footfall remain substantially lower than pre-pandemic levels, and one in every six stores is lying vacant.

However, shops haven’t had to contend this year with a lockdown along the lines of the one that engulfed trading during the first third of 2021. That forcibly shuttered shops for 120 days. Nor have retailers faced a ratcheting up of restrictions on their few remaining options to trade as was the case early last year.

Indeed, the latest SRC-SensormaticIQ footfall data even provides retailers with a flicker of hope that Scots are rediscovering the pleasure of in-person shopping. Visits to shops are at their least-worst level since the onset of Covid. The rescinding this week of the work-from-home order should help, especially in city centres, which have been clobbered by the exodus of commuters.

Sure, some onerous Covid restrictions remain, with shops still subject to statutory guidance and risk assessments covering fifty areas, including the use of plastic screens and barriers, physical distancing in queues, and floor markings. Hopefully these will be lifted soon. The industry is also facing headwinds including the spike in inflation and costs and rising taxes which is also impacting households’ budgets.

While the situation with Covid is easing, its economic legacy will be with us for some considerable time. Two successive years of restrictions during the golden trading quarter to December have taken a heavy toll, especially for non-food stores. Many consumer-facing firms face the financial equivalent of ‘long Covid’, with debts which will take years to repay.

Indeed, we estimate that Scottish shops have missed out on £5.8 billion of retail sales during the past twenty-two months. Its why SRC is proposing a plan to support the sector’s revival. There are three elements.

The first is a drive to get people back to offices and town and city centres. This could be through a combination of a concerted effort to encourage the safe return to workplaces of public and private sector office workers alongside initiatives to entice shoppers back including temporary discounts to public transport or parking or a high street stimulus voucher.

The second part is about support to retailers. Shops, almost uniquely amongst those businesses restricted in December, received no direct support. That ought to be corrected with grants for shops as Wales has implemented. Ministers should scrap the cap on business rates relief which will apply from April.

The final step is to deliver a long term, coherent approach towards the industry, with early publication of the Scottish Government’s retail strategy and its plans for city and town centre recovery.

Without further help shops face a protracted climb back to health. Its almost inevitable that some will tumble or stumble. Encouragingly, MSPs are alive to the situation and have embarked on an investigation into what can be done to aid our towns and retail destinations.

Retail remains Scotland’s largest private sector employer and a key source of economic growth and tax revenue. Its an incredibly resilient sector which in the last four years alone has weathered the Beast from the East, the peregrinations of the on/off Brexit deal, a global pandemic and resulting supply chain headaches.

There is no realistic path back to economic recovery that doesn’t involve revitalising consumer spending and a healthy retail industry. Wouldn’t it be great if a year from now we could say Scotland’s retail industry had fully turned the page on the pandemic.

David Lonsdale is director of the Scottish Retail Consortium

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