DAVID LONSDALE
I’m regularly asked if the havoc wrought by coronavirus signifies the end of high street retail. I don’t believe it does, as our town and city centres and high streets still have a great deal to offer, but they certainly do need to change.
Their strengths – as hubs for jobs, entertainment and for living – remain, but that’s tricky in the short term due to coronavirus and social distancing. Our towns and cities also account for a large slice of the £24 billion annual turnover of Scottish retail.
The pressures brought by the pandemic are accelerating, rather than revolutionising, changes within retail. The pace may be increasing, but the direction of travel has been clear for some time.
Last month the proportion of non-food retail sales bought online – rather than in-store – leapt to 51 per cent. The year before it was 33%. That is a significant jump. It has eased down a touch since April and May, but if sustained has implications for Scotland’s 22,000 stores and 232,000 retail jobs.
Online has provided a lifeline for many retailers, allowing them to generate some revenue during a barren period. It has also provided them with a fresh opportunity to sustain relationships with customers.
This is one of the wider and continuing trends within the industry – driven by shifting shopping habits, technology, weak consumer demand, and rising costs. The number of shops in Scotland has fallen 8% over the past decade, and the vacancy rate stood at 13% prior to coronavirus. Retail job numbers have similarly shrunk, although retail remains Scotland’s largest private-sector employer.
These changes will have profound implications for retail destinations, especially in less affluent areas, for employment prospects in communities more reliant on retail jobs, and for the revenues from taxes that public services rely on. It will impact the delicate economic eco-system that retail, hospitality and other high street firms find mutually reinforcing.
It will mean an uncomfortable period ahead for some. Not every shop will be financially viable. Further store closures are inevitable, but the scale is not.
This is the debate that policy-makers must now engage with. It is timely as parliamentary inquiries look at coronavirus and the recovery, and with the Chancellor and First Minister turning their attention to spending and legislative plans for the year ahead.
The Scottish Government’s creation of a town centres action group in recent weeks is encouraging, albeit the involvement of the private sector seems sparse. Hopefully the group will encourage a more coherent public policy approach, resuscitate the Town Centre Fund, and make it easier to attract footfall.
Government also needs to think more broadly about reigniting consumer confidence and enticing people back into our city centres. City centre retail and hospitality are currently reporting huge drops in footfall. Premises in those areas already have higher occupancy costs. Without a plan for the safe return of office workers, tourists and students, the short term looks bleak.
Government support for industry during the current crisis has been significant and rapid. But with business revenues falling short, more support is required – on the rent burden, which has been accumulating, and on business rates so that next spring’s "reverse cliff edge" – the reinstatement of 100% business rates – is avoided.
Scotland’s high streets will look different as we emerge from this crisis. Thousands of shops and tens of thousands of retail jobs depend on the ongoing patronage of the Scottish public. Early indications suggest any retail revival may be gradual. The extent to which retail remains the cornerstone of every high street will also depend on the decisions made by parliaments and governments.
David Lonsdale is director of the Scottish Retail Consortium
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