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Warning to government

Fifth of Scottish shops face closure, says report

shop closure
Shops under threat: (photo by Terry Murden)

A fifth of Scottish shops are at risk of closure over the next decade unless urgent action is taken, according to a new report on the sector.

The Scottish Retail Consortium has produced research into productivity and innovation warning of dire consequences caused by rising costs and the challenge of online shopping.

Chairman Andrew Murphy says governments face a stark choice – improve conditions for retailers to help them thrive, or leave them to bear mounting costs and see stores close and jobs lost.

What’s Next, the future of Scottish retail examines the impact of technology and customer choice.

Key findings:

  • Scotland is more exposed to the consequences of change in retail than the UK as a whole
  • Productivity growth in Scottish retail is slower than the UK average
  • Productivity growth is being driven by a decline in job numbers rather than investment
  • High public policy costs are deterring investment
  • Retail employment is changing and will see fewer, but better quality jobs emerge in future
  • A fifth of Scottish retail premises are at risk of closure in the next decade
  • Areas which are already most economically fragile are most likely to be affected by these changes

The SRC believes urgent action is required to respond to the unprecedented challenges resulting from the transformational change the industry is undergoing. These include:

  • Reforming the business rates system to be simpler, more flexible, and more competitive. This includes lowering the overall tax burden paid by physical retailers.
  • Developing a coherent retail industry strategy to ensure government policy engages with the reality of modern retail in a cohesive and structured manner.
  • Providing GDP-enhancing investment in physical and digital infrastructure, and providing skills funding and a framework which is fit for the changing retail environment.
  • Working to ensure retailers continue to be able to benefit from free trade arrangements with the rest of the EU as well as the UK single market

Andrew MurphyAndrew Murphy, SRC chairman (left), said: “The retail industry is undergoing the most profound transformational change of the last fifty years. Scottish retailers are being forced to adapt their business model at pace to a new world where digitally enabled customers have more information, wider choice, lower prices and multiple fulfilment options.

“This has enormous implications – especially for long established businesses.

“As sales move online, retailers will have to invest in their online and multi-channel offers while reducing the number of shops they operate from and repurposing those that remain.

“That will lead to retailers having to redesign jobs and often reduce the number of roles they offer in Scotland; reducing their physical presence to only the most powerful locations.

“Government faces a stark choice. They can create a positive business environment promoting the conditions for constructive investment in business model change and creation of quality jobs, or they can continue on the current path of largely ignoring the systemic problems and allowing increasing costs to fall on retailers.

“Such an approach will curtail investment in stores and result in fewer jobs, hollowed-out town centres and lower tax revenues.

“This paper sets out the case for a positive economic strategy which will create higher paying, more productive retail jobs in Scotland.”

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