When the British Retail Consortium says ‘thousands’ of outlets could close, we should listen, writes Ken Mann

As customers move towards the internet shopping model, there’s been speculation since before the turn of the millennium that jobs at the bricks and mortar end of the retail sector have a highly limited life span.

The question I raise is whether we should worry about an accelerating social trend ripping out Glasgow’s heart, soul and a wide swathe of employment? Scotland’s largest city remains our key retail magnet and has retained its crown as the most powerful UK retailing centre outside London.

There are ongoing job cut threats in big retailing but I’ll bet the online alternative, often a part of a shop employers’ portfolio, is the most obvious, rather than most dangerous, issue.

If that weren’t true, why would major national and overseas pension funds still invest heavily in UK retail property ownership? Indeed, why would major property groups have combined their interests in recent years by building at new sites and refurbishing existing assets with few other uses?

In the wake of recession, the major store brands have been happy to take long lease terms at premium locations. That doesn’t beat the retreat. It represents consolidation of footfall opportunity to higher quality "experiences", alongside the easy electronic method for consumers in a moment (not a life) of time poverty. It is part of wider regeneration strategies – and physical retail innovation.

More likely challenges are commercial rates (the latest Scottish rates in particular) and the introduction of the morally indisputable but questionably affordable National Living Wage (NLW) – £7.20ph for over 25s from April and £9ph by 2020. This duo post-dates recent investment decisions.

The chief trigger for this column’s look at shop employment is the British Retail Consortium’s (BRC) stark warning issued on Monday over the potential loss of 900,000 jobs over the next decade from the UK retail’s three million employees.

BRC represents Britain’s majors. When it says "thousands" of outlets could close, we should listen. Yet given my remarks regarding investments, this must more accurately mean closures in sub-optimal locations where the writing is already on the wall. The UK Treasury plays down fears of substantial job losses. Rising costs are blamed, NLW is just one component.

In 2017 it is the UK Government’s intention to introduce the Apprenticeship Levy for all UK employers across all sectors, regardless of whether they already employ apprentices or not. It is George Osborne’s new way of funding, and purportedly for creating more, apprenticeships. The Levy’s impact on increasing Scotland’s pool of apprentices is unclear; skills training is a devolved matter.

Retailers now generally support higher pay in line with a move to higher quality hubs. But they’ve already warned it will cap numbers as staff costs inevitably come under greater scrutiny during this re-balancing of bricks with clicks. Clearly retailing will have higher paid jobs but fewer of them. Around 30 per cent of shop closures are predicted by BRC to be in struggling areas of Wales and northern England.

I suspect smaller shop chains occupying town sites everywhere face a nightmare. Yet that is another predicted scenario already being witnessed. These jobs have since 2008 already gone, either through natural wastage or resulting from movement to other sectors. Glasgow has a vested interest in successfully adapting to this inevitable re-balancing of shopping habits. It is difficult but it is already making progress, along with other major UK centres.

It’s interesting to note the Scottish Retail Consortium’s (SRC) reaction to the now approved Scottish Government Budget.

"There is much in the Scottish Budget that the retail industry can support," says its Director, David Lonsdale, in a statement. He adds: "We would, though, have liked to have seen a stronger emphasis on keeping down the cost of doing business.

"Business rates are once again set to increase across the board from April, compounded by a troubling £60 million hike in the business rates supplement to be levied on firms operating from medium and larger-sized commercial premises.

"In his Scottish Budget Finance Minister John Swinney doubled the business rates supplement levied on all firms occupying medium-sized and larger commercial premises. Firms occupying these premises will see a 3.4 per cent rise in their rates bills from April, and will be paying more than firms operating in comparable premises elsewhere in the UK.

"This is an unwelcome departure away from the previous pledge to keep business rates here in line with the rest of the UK. It is also at odds with the oft-stated aim of making Scotland the most competitive rates regime in the UK.

"Our fear is that this inflation-busting rates rise opens the door to even higher taxes next year if there is another shortfall in tax revenues."

A review of rates has been promised by Mr Swinney after the May election. One key question SRC asks to be considered is whether business rates should remain a property-based tax.

That answer might hold a more immediate and pertinent sway for Scottish retail jobs prospects in city hubs than the influence of the internet, with which it is already finding an accommodation.