Simplifying structure

Primark cutting 400 jobs as Scots shops lose £5.8bn

Primark: simplifying its structure

Primark is expected to axe 400 jobs across its stores as part of an overhaul of its retail management team.

Owner Associated British Foods said it is offsetting higher costs by cutting operating costs and overheads, and said it was simplifying its UK store management structure as part of this programme.

Kari Rodgers, Primark retail director for the UK, said: “The changes we’re proposing will deliver a simplified and more consistent management structure across all of our stores, provide more opportunities for career progression and offer greater flexibility, all of which are designed to help us provide the best possible experience for both our customers and our colleagues.

“We are now focused on supporting our colleagues who are affected by these proposed changes and will be going through the consultation process.”

ABF reported a hit to Primark’s recent trading as shoppers stayed away from high streets and shopping centres.

Total Primark sales were 36% up on the previous year but UK like-for-like sales were 10% lower in the 16 weeks to 8 January when compared with pre-pandemic levels two years ago.

ABF said supply chain problems had begun to ease since last autumn, although it is still seeing some delays at ports and with shipments.

The company said it is ready to launch an improved customer-facing website but it will only allow shoppers to see where stock is available.

Russ Mould of AJ Bell says: “The forthcoming website overhaul in the UK will showcase its products and let customers check product availability by store. However, there is a question mark whether that will result in significantly greater sales.

“Consumers will often visit a website and add items to their basket as they browse the pages, often buying more than they originally intended to. Yet browsing a showcase website, writing those items down on a list and then travelling the store to buy them is a hassle and certainly not the type of convenience to which so many people are accustomed these days.

“Primark has always argued that the economics of selling goods online doesn’t add up when its prices are so cheap.

“The happy middle ground must be launching a click and collect service. It would mean Primark could finally say it sells online, and it still gets people through the door who might continue to buy additional items on impulse when they are collecting their pre-paid order.”

Scottish shops lost £5.8bn

Shops in Scotland have missed out on £5.8 billion of retail sales during the past two years of the Covid pandemic, according to new analysis.

Data from the Scottish Government and Scottish Retail Consortium shows the sheer scale of the retail sales and revenues that have been lost compared to the year prior to the pandemic.

Separate figures published earlier this week by SRC-KPMG showed retail sales in Scotland have yet to climb their way back to pre-pandemic levels. Shopper footfall was down 23% in December, and one in six shops are lying vacant.

During the past two years large swathes of the industry were prevented from opening stores to customers during Scotland-wide and local lockdowns. The affected stores were shuttered for at least 220 days as a result. The entire industry has been unable to trade at capacity for the majority of the past 22 months due to restrictions including physical distancing.

SRC is proposing a five-point plan to support the sector’s revival:

  • A concerted effort to encourage the safe return to workplaces of public and private sector office workers once the work-from-home order is rescinded early next month
  • A plan to encourage shoppers back to city centres including consideration of discounted public transport and parking or a high street stimulus voucher as Northern Ireland has implemented
  • Grants for shops as Wales has implemented this week
  • Scrap the cap on business rates relief for retailers
  • Publish the proposed Scottish Retail Strategy

David Lonsdale, Director of the Scottish Retail Consortium, said: “The stark impact of the pandemic on Scotland’s shops can be seen in these figures.

“Without help shops across the country will face intolerable burdens. Our five-point plan calls for immediate grant aid for shops, as is happening in Wales, followed by scrapping the cap on retailers’ business rates relief.

David Lonsdale
David Lonsdale: five-point plan (pic: Terry Murden)

“When it’s safe to do so retailers want to see a concerted effort to encourage shoppers back to town and city centres; which should be informed by the success of the Northern Ireland voucher scheme. These steps should then lay the ground for a longer-term vision for the industry within a Scottish Retail Strategy.

“Retail remains Scotland’s largest private sector employer and a key source of economic growth and tax revenue. There is no realistic path back to economic recovery that doesn’t involve revitalising consumer spending. Our proposals can play a vital part in aiding that process and putting retail renewal at the heart of Scotland’s recovery from the pandemic.”

See also: Scottish department store up for sale

Scotland’s economy to grow

Scotland’s GDP is expected to grow by 4.8% this year, according to new analysis by KPMG UK.

With Omicron posing a milder setback than earlier strains, KPMG expects all regions and nations to reach their pre-COVID levels of output in line with the UK. Scotland’s growth is then expected to moderate and settle at more typical levels of 2% in 2023.

According to KPMG’s UK Regional Economic Outlook, Scotland’s economy contracted by 9.7% over 2020, broadly in line with the UK average, and in 2021 Q3 GDP was still 1.9% below its pre-pandemic level. However, momentum gathered at the end of 2021, with monthly data for October 2021 showing that GDP was just 0.4% below its pre-pandemic level. 

Now the loosening of pandemic restrictions, which have up until now been more stringent than in England, are expected to help encourage growth in Scotland’s economy.

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