Action needed to stop the decline in our retail sector

Wednesday 16 May 2012

IT says something about the state of the Scottish retail sector when the only bright spot on the horizon is the creation of a new Poundland store in Airdrie, bringing 40 jobs to North Lanarkshire.

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Yesterday's Scottish retail figures were awful, the worst fall since the survey started in 1999. Year on year sales in April were down 4.1 (the equivalent figure for the UK was only 1% down. The recently announced shop closures at Clinton Cards, Thorntons, Jane Norman and others will not be the last. Yet only a fortnight ago, Finance Secretary John Swinney was hailing slight retail sales growth in the first quarter as evidence that "the volume of retail sales is on an upward trend again". What happened?

Unfortunately, it turned out to be the blip that many feared. Retail sales are as fickle as the Scottish weather, especially in spring. In fact, the two are intimately connected. March sales were helped by a spell of good weather, which encouraged customers to bring their spending forward, while April showers kept shoppers away. Other factors included the early Easter. And part of the reason this year's April figures look so dreadful is that last April had seen a record 5.5% rise on the back of a later Easter, great weather and the extra bank holiday for the royal wedding. Even so, these figures point to the continuing weakness of the Scottish economy, with year-on-year falls in three of the last four months. Even normally resilient food and drink sales fell with household budgets coming under increasing pressure. With wages failing to keep pace with inflation, continuing fear of redundancy, more households dependent on part-time earnings and benefit cuts beginning to kick in, customers are cutting spending even on essentials. In some sectors, such as footwear, even deep discounting and promotions are failing to attract buyers.This is a serious concern in Scotland, where nearly one private sector job in 10 is in retail. It is a sector dominated by female employment. Women are already losing work faster than men and an estimated 80% of forthcoming public sector redundancies will fall on them. Rather than the retail sector helping to take up the slack, it is going to add to the problem of female joblessness. Shoppers spending less is not always a bad thing, provided they have enough to buy the essentials. As David McCorquodale of accountants KPMG observes, the flight from the High Street is partly the result of structural change. It reflects the rise of internet shopping and a recognition that "our desire or ability to consume ever-increasing volumes of goods" (hyperconsumption) is not sustainable in the long term. Growth has become the political holy grail but it is also important to learn the lesson of the unsustainable retail bubble, largely fuelled by mounting personal debt, of the Blair-Brown years. Today's unemployment figures are unlikely to provide much cheer, especially as regards female and long-term Scottish unemployment. Every day the rationale becomes more compelling for the sort of Plan B that Francois Hollande wants for France. The Coalition's scary talk about a looming sovereign debt crisis and Greek-style debt sucked confidence from consumers in 2010. Their purses and wallets will stay shut until confidence returns.

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Action needed to stop the decline in our retail sector

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