It has been 12 months of upheaval for Scotland’s retailers and their customers, a continuation of the “permacrisis” of recent years which has impacted Scotland’s largest private sector employer.
This time last year Scottish Ministers were on the cusp of introducing fresh directions encouraging working from home, curbs to socialising, and reinstating Covid restrictions in stores slap bang in the busiest trading period of the year.
Unsurprisingly, shopper footfall plunged as a result. It is perhaps easy to forget now but the work-from-home order was not rescinded until the end of January. Eateries had to collect customer data until mid-March and, after 24 months of complying, shops were finally able to dispense with in-store restrictions later that month. While the rest of the UK flexed restrictions more swiftly in line with the progress of the virus, Scotland took longer and we still had to wear face coverings well into April, for around 650 days in all.
It ended an extraordinary two years which, the SRC estimated, cost £5 billion in lost retail sales and left retailers reeling with more debt and cash flow woes. Sadly for many the pandemic was the final straw, with shops closing across the country.
Unfortunately, a brief window of post-Covid economic optimism dissipated rapidly due to conflict in Ukraine. The ensuing energy and commodity shock supercharged the costs crisis and compounded supply-chain issues and bottlenecks caused by a world rebounding after the pandemic. Twelve months ago shop price inflation was at 0.3%. Today, prices at the tills are soaring by 7.4%, an 18-year high.
Other factors have challenged consumers and retailers. Protracted industrial action on the railways has hampered the return of commuters and centre retailing. Political turbulence at UK level did nothing to assist.
Nine months after the last remaining Covid restrictions were removed, shopper footfall remains 15% lower than pre-pandemic levels. Shop vacancies are substantially higher and retail sales have flatlined in real terms for the past six months. In recent weeks several well-known brands have faltered, while others have announced store closures, and that’s before the traditionally sticky period in late January and February when revenues usually dip and rent and rates bills need paid. The economic scarring of the pandemic and costs crunch will be with us for years.
There have been bright spots. The Platinum Jubilee gave a timely boost to footfall. Glasgow City Council introduced a shopper stimulus scheme for vulnerable households, and Scottish Ministers published their long-awaited retail strategy.
Elsewhere, retailers made further progress towards their net zero by 2040 target, adopted new guidance on selling pre-loved items, and stores selling drink bottles or cans invested significantly in preparations for the deposit return scheme. Retailers also raised £16 million for good causes in Scotland.
Some supply-chain and freight challenges have eased, however overall inflation has yet to abate. Fierce competition means retailers have worked hard to keep down prices for customers, fixing the price of essentials and offering discounts to blue-light workers.
Despite acknowledgement from government that businesses are facing their own “costs emergency”, there has been little by way of immediate relief for firms. UK Ministers aren’t hiking the business rate in England but we await a decision on that from their Scottish counterparts. The devolved regulatory burden has not eased either. A review back in July of red tape causing angst to firms came and went and the only tangible outcome is a promise of a task force to look at things.
Meanwhile a plethora of legislation and consultations have been unveiled outlining fresh restrictions on the sale of alcohol, fireworks, and where in-store certain foodstuffs can be put. Fresh curbs on retail development are being introduced into the planning system, curtailing new drive-thrus and out-of-town stores.
It has been a year of profound ups and downs for Scottish retail. The industry is hoping for less of a white-knuckle ride over the coming twelve months. With the economy in a funk, the outlook for demand uncertain, and unpredictability the new norm, prospects for the coming year look inauspicious. Retailers will need to call upon all the muscle memory, agility, and remarkable resilience they have displayed in recent times.
David Lonsdale is director of the Scottish Retail Consortium
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