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More empty shops warning as costs escalate

Edinburgh suffered highest shutdowns (photo by Terry Murden)

Edinburgh suffered highest shutdowns (photo by Terry Murden)

A spike in the number of empty town centre shops is an unwelcome reminder of the heavy burden of property costs, says a leading retail industry figure.

The town centre vacancy rate for Scotland rose from 7.5% in July to 9.2% last month while footfall remained largely static.

David Lonsdale, director of the Scottish Retail Consortium has warned of the damaging impact on local communities of escalating costs for shop owners.

He said: “The spike in the shop vacancy rate is a cause for concern. The increase in the number of empty shops in our town centres is an unwelcome reminder of the heavy burden of property costs.

“If property costs in general, and business rates in particular, continue to escalate, we should all be concerned about the likely investment-sapping impact on our local communities up and down the country.”

He said retailers were looking to the Chancellor to provide some help for consumers in the Autumn Statement.

“Retailers’ will be looking for convincing action to lift consumer spirits at a time when household spending power in Scotland is being eroded by rising inflation and higher personal taxation,” he said.

“The industry is also looking for policy makers to stem the relentless rise in government-inspired cost pressures, beginning with a pause to the introduction of the apprenticeship levy and a reversal of the doubling of the large business rates supplement which has affected 7,500 retail premises in Scotland.”

Diane Wehrle, marketing and insights director at data compiler Springboard: “It is disappointing that Scotland’s vacancy rate has increased.”

She said the UK vacancy rate has fallen from 10.1% to 9.5% but this has been a result of the increase in short term lets in the run up to Christmas.

“Scotland doesn’t appear to be benefiting from this trend.”

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> Bank of Scotland data for October has pointed to a slower expansion of Scotland’s private sector, as output growth weakened, new business levels stagnated and volumes of incomplete work deteriorated.

Companies continued to add to their payrolls despite facing the sharpest increase in input costs since September 2011. Moreover, a further rise in output charges was reported, although the rate of inflation was weaker than that for input costs.

The increase in output was broad-based across manufacturers and service providers, with both reporting marginal growth in business activity levels.

New order intakes in Scotland’s private sector stagnated, following a marginal expansion the previous month. A fractional increase in new business at service providers was weighed down by a slight contraction in the manufacturing sector. 

Job creation continued in Scotland’s private sector for a third successive month. That said, the latest increase in staffing levels was the weakest during this trend.

Private sector companies reported the quickest deterioration in outstanding business for eight months. Where a decline in incomplete work was recorded, firms generally reflected on a fall in new orders, stemming from market uncertainty.

Cost pressures also intensified at the sharpest pace for over five years, with panel members linking this to the depreciation of the pound.

In line with the trend for input prices, private sector companies operating in Scotland raised their selling prices further. Although the rate of inflation was the fastest since February 2014, it remained weaker than that for input costs.

Nick Laird, regional managing director, Bank of Scotland Commercial Banking, said: “Output for Scottish private sector companies continued to show growth in October, albeit at a reduced rate weighed down by a combination of higher input prices and stagnating new business.

“The increasing cost burden is a cause for concern, with the rise in input costs growing at the quickest rate in just over five years attributed to the depreciation of sterling.

“Encouragingly, workforce numbers rose for a third consecutive month. Yet with a further solid decline in backlogs of work recorded, we could see jobs growth come under pressure towards the end of the year.”

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