Retail Strategy Steering Group minutes: April 2021

Attendees and apologies

Steering Group Members

• Mary McAllan, Director, Economic Development, SG -  Chair
• Andy McGeoch - Chief Executive, M&Co
• Andrew McRae - Policy Chair, Federation of Small Business (FSB)
• Colin Smith - Chief Executive, Scottish Wholesale Association (SWA)
• David Lonsdale, Director, Scottish Retail Consortium
• Fiona Richardson – Chief Officer, Trading Standards Scotland COSLA
• John Brodie – Chief Executive, Scotmid Co-operative
• John Lee - Head of Policy & Public Affairs, Scottish Grocers Federation (SGF)
• Kathy Murdoch – Centre Manager, Buchanan Galleries
• Katie Hutton - Director of National Training Programmes, Skills Development Scotland
• Lindsay Methven – Director of Place, Scottish Enterprise
• Lucinda Bruce-Gardyne – Board member, Scotland Food and Drink and Founder of Genius Foods
• Neema Rathod – Policy Advisor, Scotland Office
• Professor Leigh Sparks, Deputy Principal and Professor of Retail Studies, Stirling University
• Robert Deavy – Organiser, GMB
• Reuben Chesters - Project Manager, Locavore Community Interest Company
• Tracy Gilbert – Deputy Divisional Officer, Union of Shop, Distributive and Allied Workers (USDAW)
• Catherine Brown, Economic Development, SG
• Rowan Smith, Economic Development, SG

Secretariat

• Alisha McAuley, Economic Development, SG

Apologies

• Andrew Murphy – Chief Operating Officer, John Lewis PLC
• Emma Parton – Director, The Highland Soap Company
• Carron Smith - Falkirk Council / Scottish Local Authorities Development Group
• Hugh Lightbody – Chief Officer, Business Gateway
• Keith Irving – Chairman, Castle Douglas Food Town Initiative and Owner of Irvings Homestyle Bakery Ltd
• Neil MacLennan - Scotland Office
• Tracey Clements – Chief Operating Officer, Boots – no longer a member of the group has moved to a new post.
• Debbie McCall, Economic Development, SG
• Emma McGinlay, Economic Development, SG

Items and actions

Item 1:  Welcome, Introductions, Apologies

• The Chair welcomed attendees to the third meeting in 2021. She noted she was temporary Chair due to pre-election period. Apologies were noted as above. 

Item 2:  Progress So Far

• vision is now published on the Scottish Government website.
• challenge now is to identify the actions and recommendations for the strategy to allow delivery of the Vision.
• support materials created to support this process. Proformas for submissions were issued as part of meeting papers. Rowan explained rationale behind these and how they will work.

Item 3:  Sector Theme

David Lonsdale delivered presentation on the Sector theme.

Key Points

• turnover in retail region of £24- 25 billion a year.
• around ¼ million people work in retail directly and many more in the supply chain.
• largest private sector employer.
• industry accounts for 13% of all commercial investment.

• retail is underperforming in terms of having a number of retailers to scale in Scotland. A number of companies represented around this steering group who are running sizeable companies not only across Scotland but parts of the UK.

• most recent sales monitor - comparison with two years at the same period, retail sales are down across Scotland around 15-20% over the course of the pandemic.

• grocery is up, convenience stores have done better than other parts of the food retailing climate. The estimate is that since the onset of the pandemic retailers have lost £4 billion in revenues. 1 in 7 stores empty which is at a 6 year high.

• city centres and shopping centres have deepest declines in footfall, according to data for Scotland against Wales and England on day one when they opened – Scotland figures are down compared to 2 years ago.

• consumer behaviours changing, more people shopping online, using their mobile phones, less spend in towns and city centres. Changes in households and car ownership have impacted convenience shopping. Economy and financial crash  have affected  growth.

Challenges facing Retail

• COVID –possibility for further restrictions going forward such as capacity limits, signage, hygiene.
• COVID waves may also affect economic buoyancy.
• shopping habits and uncertainty on whether people continue to shop online or return to shops.
• increase in homeworking, raised from 5% pre pandemic to 30%. Growth of interest in recent times in terms of wellbeing economy, ethical issues and sustainability.
• retailers reducing their shop premises’ footprints. This may impact retailers who are tenants and their landlords.

Following the presentation, the following points were raised:

What will the sector workstream look at?

• seek to understand emerging trends of relevance to shoppers and consumers.
• identify how to work with consumers - greater reliance on digital space.
• gauge a better sense of economic opportunity for the sector over the next decade and which parts of it offer the best prospects.
• assess data and identify if we should have analysis of retailers of scale in Scotland - if we have sufficient numbers of them and our performance against the rest of the UK.
• assess support for retailers for upscale/start-up businesses.
• help government understand economic impact - how sizeable retail is and how to prioritise accordingly.

Additional Points from group discussion

• 30% down on footfall from 2019. Struggling from lack of office workers and tourists.
• compliance good, committed to spend – high value items, jewellery, garden furniture and electrical items did well but fashion, footwear and health and beauty poorly.
• consumers displaying lack of confidence on going out through social media feedback. People are expecting bargains. Shop local message is working well, but to the detriment of the city centre.
• retail industry is over spaced but also the footprint retailers require is more specific - they are no longer looking for large, empty warehouse type units, but bespoke to their brand and product.
• landlord and tenant relationship is vital. Leasing model is outmoded/outdated. Future rents should relate to how beneficial particular retailers would be for town/city – should be a benefit or a draw and should determine rent paid.
• focus on repurposing and reimagining retail. Most clients/landlords unsure what they can do with retail space – something for the workstreams to look at as well as tax/regulatory issues.
• pandemic recognised in accelerating existing trends 5 years in 13/14 months, these shifts were starting before but need to look at what was changing post and during COVID-19.
• 57% of people say being self-employed is less attractive and of 1/5 surveyed felt the previous government did not value the achievements of the self-employed. Need to create supportive environment for private enterprise and the contribution it makes to the economy.
• access to patient capital and detailed/current market research for entrepreneurs is essential. Also access to capital for established businesses with potential which have temporarily flat-lined during the pandemic.
• consumers used to convenience with the rise of online. Need to make shopping local convenient again and repurpose of spaces in town centres, shop clusters, and affordable parking all essential to draw consumers back. 
• COVID provided insight into increasing inequalities in this female-led sector, 60% of retail workers are women, cutting into sectoral/communities roles. Accessing work, and making places feel safe – a lot of food retailers in particular close late at night, women leaving work late, getting to and from work in a low-paid sector and in towns isn’t always helpful when there is no public transport.
• fast changing sector – training/upskilling required so retail provides meaningful/desirable employment.

Item 4:  Workstreams and ways of working

• Rowan Smith took the group through the process for the Proforma templates.

Item 5:  Recap and next steps

• Mary McAllan provided summary of discussions and thanked the group for their contributions to the discussions.
• key themes identified on importance of data, responding to consumer needs, cost structure of retail, employment demographics, and scale issues for the sector as a whole.