Retail sector: ministerial statement - 26 October 2021

Statement to the Scottish Parliament by Minister for Public Finance, Planning and Community Wealth Tom Arthur on Scotland's retail sector given on 26 October 2021.

There are less than two months to go until Christmas. The run up to the festive season is the most critical trading period of the year for retail.

The impact of the pandemic on the sector has been enormous. It has changed the way staff work and businesses operate.

For some businesses, this Christmas could mean make or break, given the disruption of Covid on top of the challenges associated with Brexit.

Since the start of the pandemic, businesses have benefitted from more than £4.3 billion in Scottish Government support.

This includes a generous Non-Domestic Rates relief which has been extended for the retail sector along with hospitality, leisure and aviation throughout 2021-22.

Today, I will set out a range of further policies and programmes that will support retailers and those who work for them to make a fair and prosperous recovery.

Retail is important to each and every one of us. It creates jobs, as one of the largest private sector employers in Scotland, with over 233,000 workers. That’s around nine per cent of Scotland’s entire workforce.

It creates wealth, contributing £5.8 billion in GVA to the Scottish economy according to the most recent statistics.

But more than this, it is a part of the fabric of our communities and our society. There are almost 14,000 retail businesses in every part of Scotland.

Shops are often the cornerstone of our communities as demonstrated during the pandemic.

We relied on retail workers during lockdown for the foods and essential supplies we needed. Many of them went above and beyond – particularly to ensure our most vulnerable citizens didn’t go without.

Their efforts were nothing short of heroic and I am sure all in this chamber would offer their thanks.

Through the success of the vaccination programme, we have been able to lift many Covid restrictions. This has allowed individuals and businesses to get back to something much more like normality.

However, COVID-19 has not gone away and we remain in a difficult position. It is necessary to retain some safeguards for now, whilst we recover and rebuild for the future.

Recovery and rebuilding is crucial for the retail sector which was subject to restrictions for many months.

The Scottish Retail Consortium estimates that some retail businesses were closed for up to 220 days during lockdown.

And while I recognise there are still challenges, there are signs of recovery. According to monthly GDP statistics, retail output is 10.8% higher than 12 months ago and 4.8% higher than in July 2019, before lockdown measures were introduced.

However, more than 21% of wholesale, retail and vehicles repair businesses are reporting decreased turnover compared to what is expected at this time of year.

Figures from the Scottish Retail Consortium published last week show retail sales down 9.1% compared with September 2019.

These depressed sales figures are compounded by wider challenges including  Covid-related global supply chain disruptions.

But others – particularly labour market shortages - are the result of the UK Government’s decision to leave the EU in the midst of the pandemic. Clearly, urgent action is needed and we continue to press the UK Government on this.

However we must look at the changes that continue to impact and transform retail. Technology is influencing consumer behaviour and being harnessed by retail.

Online shopping now accounts for more than a quarter of all retail sales, compared to 3% in 2007 when the first iPhone appeared on the market.

Innovations such as self-scanning checkouts, automated stock control and digital sales and marketing are now commonplace.

While Covid may have accelerated the transformation, some of our biggest retail brands such as Debenhams and Top Shop have not kept pace and disappeared from our high street. So we need a forward–looking, coordinated, collaborative response to support the future retail sector.

Earlier this month, the Scottish Government published its Covid Recovery Strategy. It states that a strong sustainable economy goes hand in hand with a fair and equal society.

Our forthcoming 10-year National Strategy for Economic Transformation will set out the ways we will support businesses, create new, good, green jobs and build the industries of the future.

Key to this is constructive collaboration. For the retail sector, that collaborative effort is being delivered through the development of our Retail Strategy. 

We are harnessing the expertise of retail businesses, trade unions, academia, public sector and trade organisations to identify the challenges and opportunities for retail in Scotland.

While the strategy will be published later in the year I want to highlight one of its key components.

The Fair Work Convention’s report “Fair Work in Scotland” highlighted the fair work challenges facing the retail sector. It also states that ‘a sectoral approach, building on the core principle of joint working, would support progress towards achieving our aim of becoming a Fair Work Nation by 2025.”

I can therefore confirm that strategy will therefore look to establish a sector-led group which will work jointly with partners, including trade unions, to focus on delivering the key challenges facing retail and in particular will be tasked with improving fair work across the sector.

Presiding Officer. I wish to turn to a matter of considerable interest to colleagues in this chamber: New Year’s Day trading.

The trade union Usdaw petitioned for a consultation on whether Scottish Ministers should use existing order-making powers under the Christmas Day and New Year's Day Trading (Scotland) Act 2007 to close large retail stores on New Year’s Day.

The matter was considered by the Public Petitions Committee in the last session of this parliament. The Scottish Government this summer honoured our commitment to consult.

While I am sympathetic to the campaign to legislate, the limits of the Christmas and New Year’s Day Trading Act are clear and - having carefully considered responses to the consultation, the prevailing economic conditions and the options available to us under this legislation - it is with regret that I confirm we will not be making an order.

We have been consistently clear that, in line with the statutory requirements of the Act, a decision on New Year’s Day trading will take account of the prevailing economic conditions which remain difficult for the retail sector.

Employment law is, unfortunately, currently reserved. As such, this legislation would only restrict trading in stores over a certain size and it will not give all retail workers a day off.

The legislation would not even cover all workers in large retail. Simply closing stores will not prohibit restocking, deliveries or online shopping – so employees may still be required to work. Crucially, it also does not guarantee that those who do get the day off will be paid for it.

I am clear that this legislation cannot deliver what we as a government and what the unions want - better conditions for all workers. We are unable to guarantee paid time off or protect all workers under this Act.

We want to go further than the legislation allows and put Fair Work principles at the heart of the retail sector. Fair work principles should apply to those working in all stores and in all parts of retail operations.

The Retail Strategy will have Fair Work at its core, benefitting retail business by making them more attractive to workers, and more resilient, productive and profitable.

As I have outlined, this requires a coherent, collaborative and long-term approach involving retailers, trade unions and employees. I would be happy to discuss this further with MSPs with an interest in this statement.

Presiding Officer, retail is a vital part of our town centres and cities and we must support them too.

Through the work of the Town Centre Review and City Centre Recovery Taskforce, we are supporting those economies to become more diverse and sustainable as they face the challenge of changing and evolving retail patterns.

Earlier this summer, I launched the Scotland Loves Local Fund. This fund will help bring creative projects and activity into our towns and neighbourhoods – building wealth in local communities and attracting footfall which is essential for shops and businesses.

With up to £2 million of investment this year, the fund will enhance the Scotland Loves Local marketing campaign and gift card scheme.

I am looking forward to being able to announce the awards for this fund for which I understand there have been 242 applications.

I am also pleased to announce the Scotland Loves Local gift card is now available to consumers, backed by the next phase of the Scotland Loves Local marketing campaign. I encourage people to support their local businesses, especially in the run up to Christmas.

And the National Planning Framework - NPF4 - will provide updated planning policy on retail, recognising its role in the economy and for communities, and linked to 20 minute neighbourhoods - connected, compact, accessible places that can contribute to community wealth building.

We will lay a draft of NPF4 in parliament, and carry out extensive consultation later this autumn.

Presiding Officer, our vision for is for a thriving retail sector in Scotland. The policies and programmes I have set out today will support retailers and other businesses recover from the impact of Covid and Brexit by increasing footfall and activity while revitalising local places and town centres.

But our recovery must be progressive. It must improve the lives of people and their families – people who work in retail and the customers they serve.

I want the retail sector in Scotland to become an exemplar for inclusive economic growth. Through the retail strategy, the sector will play its part in creating a fairer, greener and stronger Scotland.

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