Boom and bust?

Without a helping hand from government, we may soon be looking back on that era as the good old days, especially on Scotland's high streets, where retailers face their third tough year running. Sales faltered in 2010 and since mid-2011 Scottish retail sales have lagged behind the rest of the UK.

At best Scotland's stores have had a "respectable" Christmas, according to the Scottish Retail Consortium (SRC). Today Scots will join the estimated seven million shoppers heading for the Boxing Day sales but the packed stores will create only an illusion of prosperous trading.

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Desperate not to be outdone by their competitors, many stores slashed prices before Christmas to lure hard-up consumers. Others were reduced to showrooms, as shoppers visited stores to select products before going home to find a better price online. And much of today's spending will be of vouchers bought by cost-conscious gift-givers well before Christmas in anticipation of deep discounts later. All this may generate a few short-term thrills for bargain-hunters but in the longer-term it means more boarded-up shops and truncated branch networks.

After 2012's high profile casualties Comet and JJB Sports, nearly 140 retailers are in a critical condition, with close to 14,000 in "significant distress", according to windup specialist Begbies Traynor. With quarterly rents due yesterday, the unremitting squeeze on profit margins and customers tightening their belts after Christmas, a swathe of retailers are at risk of going under early in the new year.

The situation is unlikely to improve any time soon. The shift to shopping on the internet seems inexorable with the average UK resident now spending more than £1,000 a year shopping online. On Boxing Day alone, retail websites are braced for 126 million visits. And after years of mounting personal debt, the return to the notion of living within one's means ought to be welcomed. Yet, despite these hard times, shopping remains a favourite pastime, especially among women and the young. Few welcome the sight of a Scottish high street dominated by charity shops and "To Let" signs. City centres in which retailers are reduced to a race to the bottom on prices are simply not sustainable. During the old-style boom and bust cycles, retailers would endure a fairly brief period of pain as they destocked, allowing the cycle to begin again but there is no sign of that happening any time soon. Instead the economy continues to bump along the bottom and 43% of households in a recent survey believe their finances will worsen in 2013.

Success stories, even in these grim times, suggest that energetic and imaginative retailers can help themselves. The pheonix-style rebirth of Clinton Cards under its American owners and the rise and rise of John Lewis with its focus on customer service, are cases in point. Plaudits are also due to all those small independents who have braved the chilly economic climate and made a go of it through sheer hard work and entrepreneurial flair, often supplemented by internet sales.

Some shops that fail would never have succeeded, even in the good times. Nevertheless, without intervention, some retailers who deserve to survive will find that the sums are not adding up. Today the SRC argues persuasively that high street business rates in Scotland should be frozen. Last year they rose by 5.6%, more than double the current rate of inflation, while once again council tax was frozen. Instead of practical help, the Scottish Government has merely launched a consultation. Instead of arguing for corporation tax to be devolved and pledging to match business rates poundage in England, Finance Secretary John Swinney could have used the powers that he already has to vary business rates in a sector that accounts for nearly 10% of the Scottish workforce.

Perhaps it is time the government started treating our retailers like an endangered species rather than golden geese. Otherwise for boom and bust, read bust and bust.