The final item of business is a members’ business debate on motion S4M-10420, in the name of Gordon MacDonald, on celebrating the contribution of independent retailers to the Scottish economy. The debate will be concluded without any question being put.
Motion debated,
That the Parliament celebrates the contribution of independent convenience store retailers to the local economies of Scotland’s cities, towns and rural and island communities; understands that there are more convenience stores in Scotland per head of population than the rest of the UK and that convenience stores employ over 41,000 people in Scotland, providing key services to many local communities not only in the Edinburgh Pentlands constituency, but to every parliamentary constituency in Scotland, and considers that a successful independent convenience store sector helps to ensure the long-term sustainability, diversity and vibrancy of high streets.
17:52
I thank John Lee of the Scottish Grocers Federation for his assistance and welcome the convenience store owners who are in the public gallery tonight.
The independent convenience store sector has been a cornerstone of all our local communities for generations. Whether to supply a pint of milk and a newspaper in the morning or a few messages on the way home from work, they are open and ready to serve from early in the morning to late at night in every city and town and in every rural and island community across Scotland. Indeed, Scotland has more convenience stores per head of the population than any other part of the United Kingdom and they employ over 41,000 people. To put that into context, that is more people than the combined total employment provided in agriculture, forestry and fishing, or the motor trade in Scotland.
It is not just direct employment that local shopkeepers provide, but employment for their contractors and suppliers. The vast majority of convenience stores are owned and operated by small business owners, and because they are part of the local community they tend to use local contractors and suppliers. Research by the Scottish Grocers Federation identified that a typical convenience store reinvests £250,000 in the local economy by using local tradesmen, local produce suppliers, local shop fitters and local garages as well as local legal and accountancy firms. As a result, convenience stores are, I believe, one of the cornerstones of a community in the same way as the primary school, the community centre, the post office and the pub. Their presence in a village, town or neighbourhood helps to support that community. In addition, many corner shops provide a range of services, such as a cash machine, a bill payment service, home delivery or even just a notice board, all of which help to sustain the local community.
All is not well in the convenience store sector, especially among family-owned businesses. Two main issues affect them: the growth of the convenience store network of the big four supermarkets and the resultant overprovision of grocery stores. The decision by the large supermarket chains to move into the convenience store sector in Scotland has put pressure on small independents. In the current economic climate, customers’ income has, in many cases, not kept pace with inflation, and the outcome is that the available spend in an area is spread more thinly across all the retailers, with the result that the viability of some stores has been brought into question.
The expansion by the big four supermarket chains into convenience stores is detrimental not just to small independent shopkeepers, but to other small businesses, because the large conglomerates tend to have national contracts for maintenance and servicing and international suppliers, which results in the loss of the local economic benefit that is generated by having a locally owned store.
The other issue that I mentioned is the overprovision of grocery stores. I will use an example from my constituency to highlight the problems that it can cause. Along the stretch of the B701 from Oxgangs Road North to Colinton Mains Drive, there are two large supermarkets, one multiple convenience store operator and three independently owned convenience stores in the space of just over a mile. It is an area of my constituency that most people would consider to be well served by grocery stores and to have healthy competition and choice.
However, along with its partner, City of Edinburgh Council has decided to sell land that was previously occupied by a social work building and a church to a major grocery discount store operator. The local community is split. Many families would welcome the discounter, while others have signed a petition that opposes the building of yet another supermarket. Their reasons for doing so include the effect of increased traffic congestion, which would result in additional traffic noise and deteriorating air quality, the effect on existing employment and, ultimately, possible store closures.
There is also disappointment in the local community that the land has not been designated for housing, as there is unmet demand for new housing in the area. Many members of the congregation of the now closed St John’s church were under the impression that the land would be used for much-needed housing, but they now find that a licensed premises could occupy what was the church ground in an area where there are already eight licensed premises. It is at such times that the city planners have to take a step back and ask themselves whether the location of another supermarket is in the best interests of the whole community.
In doing so, council officials should examine the job creation claims and assess whether the proposed employment opportunities will really be new posts or will simply be employment that has been displaced from existing operators who need to downsize their operation to meet their reduced revenue.
A study by the UK retail trade association, the Association of Convenience Stores, entitled “Job Creation Claims in New Supermarket Retail Developments” found that, in many instances, the claims about the number of jobs created simply represented a head count. As part-time posts make up 49 per cent of all retail opportunities, the number of full-time equivalent jobs will, in most cases, be substantially lower than that claimed by the supermarket.
If the new supermarket in my constituency is given the go-ahead, I will be concerned about the survival of all three small independent stores and the possible reduction in the number of employment opportunities that are provided by the existing supermarket operators. Members of the convenience store sector, unlike the large supermarket chains, do not have reserves that allow them to trade at a loss for a prolonged period of time.
Since 2008, many small businesses have experienced difficult trading circumstances, and the introduction of the Scottish Government’s small business bonus scheme has assisted them. Across Scotland, owners of 92,000 small businesses, many of whom own local convenience stores, have had their rates abolished or substantially reduced.
However, this is not just about existing businesses. We need to make our shopping areas more attractive by offering a wider, more diverse mix of high-street businesses, and we need to encourage young entrepreneurs to create new businesses that make use of the vacant premises in our town centres and neighbourhood shopping areas. A more diverse high street or shopping area will generate a higher footfall that should benefit all businesses in the area.
The Carnegie UK Trust, which has developed a number of retail initiatives from pop-up retail festivals to an online toolkit for examining a town’s characteristics, states in its briefing:
“We recognise that for many towns, the contribution of independent retailers is a crucial factor in the long-term sustainability, diversity and vibrancy of high streets.”
That “sustainability, diversity and vibrancy” can be achieved only if everyone involved in developing our towns and cities recognises the importance of the independent convenience store sector’s contribution to our economy and understands the importance of sustaining it.
Many thanks. I call Margaret McCulloch.
18:01
I was expecting a couple more minutes to write down some more notes, Presiding Officer. I decided to speak only at the very last minute.
Independent stores play a very important part in the country’s local economy. For example, when he retired, my dad used to go to the local shop for his newspapers, his milk and his pension; in fact, his visits became social events, because he got to know the retailer personally. For others in the same circumstances, the retailer might be the only person they speak to the whole day, and they play a very important part with regard to social communication with individuals.
As a result of economic circumstances, our independent retailers have been under a lot of pressure and are struggling to survive. Parking, for example, can be a problem that hinders sales. As has been pointed out, they are also struggling with the big multinational chains, which, although they provide a service, do not provide that very important personal service.
Going back to my previous life as a trainer, I know that local retailers provide employment for a lot of young people. They take an active part in—indeed, are at the forefront of delivering—modern apprenticeships and see the benefits of those programmes. Finally, as convener of the cross-party group on towns and town centres, I hope that the Government and local authorities will consider more initiatives and see what they can do to preserve these businesses and help them to survive.
In concluding this very short speech, I ask the Scottish Government to tell us what it can do to help these local businesses, which need more support not only for training but to tackle the red tape that hinders them and to ensure that they survive and develop.
18:03
I thank Gordon MacDonald for securing this debate, and I echo his sentiments about our food, clothing and service retailers. It is right that we celebrate the contribution made by our independent convenience stores, which are often the Cinderella of our focused sectors as far as our national economic strategy is concerned.
Not only can independent businesses play a vital role in the future of our high streets but, if they are strong and well managed, they can attract new business and grow into more medium-sized operations. The retail sector as a whole employs 255,000 people, and 41,000 people are employed in convenience stores. It is a large private sector employer that employs 14 per cent of the non-Government workforce.
Our retailers have had a difficult few years with the recession. Sales volumes in small and medium-sized retail businesses—and particularly independent convenience stores—declined from 2008 to the first half of 2012, although limited growth has occurred since 2012. On a wider scale, I believe that the feedthrough and leakage of spending from the recent successful Commonwealth games have been reflected in a change in footfall figures and in the flow of business that embraces small, independent operations.
I praise the retail sector’s efforts to tempt shoppers with not just keen prices and promotions but best value, customer service and quality. The challenge is to maintain growth and gain long-term benefits. In the past few years, another challenge to convenience stores has been from out-of-town supermarket developments. However, I have been told in discussions with Leigh Sparks that the supermarkets seem to be reappraising their investment strategies and that they are looking at town centre investment, which would provide the independents with new challenges to confront.
The Scottish Government has recognised the importance of our retailers in its town centre review, which included sector experts from all over the country and representatives of smaller independent units. The review looked at sharing resources and services, developing creativity in enterprise and contributing generally to the health of our town centres. All that is key.
The review said that the Scottish Government and local authorities need to recognise and prioritise the importance of town centres for sustainable economic growth. The lifeblood of that flows naturally from independent convenience stores.
We need to ensure that all dimensions of the retail sector are seen to offer a good career path. To achieve that, we must work with all the skills development providers—our colleges and our employers—to secure the aspiration for those who would like to be involved in retail. We could start at the bottom by working with independent convenience stores on the creation of appropriate apprenticeships.
Our independent retailers play a vital role in the success of our high streets. The town centre review group made a great start on supporting the sector, but challenges remain. We must embrace those who know how to run independent convenience stores. There are great opportunities to grow that sector.
18:08
I, too, congratulate Gordon MacDonald on securing the debate. I thank the Scottish Grocers Federation, the National Federation of Retail Newsagents and the Carnegie United Kingdom Trust for their helpful briefings, which I think that many members will have taken advantage of in preparing for the debate.
We are right to talk about the enormous contribution that independent retailers make to the economy. Figures have been put out there already, but they are worth repeating—41,000 people across Scotland are employed in the sector and there are 5,500 stores.
Most important, those stores have a multiplier effect. We heard about the statistics on investment in stores; that leads on to local trades, shopfitters and suppliers in the local area. It is a fact that a far higher percentage of each pound that is spent in a local retailer circulates back to the local economy in comparison with spending at an out-of-town centre or online.
Margaret McCulloch touched on my next point. I do not know whether it is by accident or design, but the number of people who get their first job—their first opportunity on the employment ladder—in some kind of independent retailer is remarkable. That should be recognised and applauded.
Independent retailers contribute nationally and locally, but they are more than that—they are community hubs wherever they happen to be located. We read in the briefings about in-store post offices, ATMs and bill payment services. Gordon MacDonald touched on the fact that many such stores have become the main source of advertising for the community.
If people want to find out when the gala day is and what is happening, who the best local supplier is to speak to for whatever trade, or what classes or training events are on, their local retailer is very often the first—and best—port of call. Many retailers put up that information for free but even those that charge do so for very reasonable and fair rates.
Although I have no scientific evidence to back this up—only personal experience—I believe that those who own and operate independent retailers in their communities are far more likely to be involved in, or indeed to run, their local community councils. When we wrap all that together, independent retailers genuinely give back in a way that many other businesses either do not or do far less of.
Some of the challenges that the sector faces have been touched on, but others have not so I will move on to them. As regards the challenges that are mentioned by businesses, the challenge of business rates is very near the top of the pile. The Scottish Government should be applauded for the small business bonus. We supported the bonus from day 1, we encouraged the Government to accelerate it, and it has been a resounding success.
The question for the minister and for all of us now is: where next with the small business bonus? Can we raise the threshold so that more local retailers come in underneath the threshold and benefit from it? Can we have more of a stepped system so that, if a retailer is just above the threshold, they do not miss out entirely and they still get some benefit from the small business bonus? Is there something that we can do to slow down the rises in business rates? I do not offer all the answers, but they are questions that we all have to think about.
I know that the minister has form on regulation, particularly in his previous role. Retailers have been hit by tobacco, alcohol and indeed environmental burdens. Some businesses have been hit by one of those burdens; many independent retailers have been hit by all three over a fairly short space of time. Is there something that we can do to reduce the burden of regulation on them? It is more difficult to comply with regulations as a smaller business than it is for far larger businesses.
Can we do more to help independent retailers on the issue of illicit trade? The Scottish Grocers Federation hosted an excellent session on the issue in the Parliament just a couple of months ago. Illicit trade damages legitimate businesses, harms consumers and helps those who are trying to get round the rules.
Any responses to those issues that the minister can touch on will be gratefully received.
18:12
I congratulate my colleague Gordon MacDonald on securing the debate.
The benefits of convenience stores in Scotland are many, as we have heard. Such stores boost employment, allow people to start up and develop their own businesses, enhance the Scottish economy and serve local communities.
Scotland now has more convenience stores per head of population than any other part of the UK, with one shop per 949 people. Those stores are indeed the lifeblood of many of our communities. Convenience stores employ approximately 1.6 per cent of the Scottish working population.
The benefit of independent convenience stores to ethnic minorities is greater than for any other group, as 60 per cent of Chinese and 70 per cent of Pakistanis living in Scotland work in small businesses. Asians make up only 2.7 per cent of the Scottish population, but they are a vital asset to the independent convenience store sector. Many independent convenience stores are family businesses, and almost two thirds of those family businesses employ at least one other family member.
Independent convenience stores, through the hard work of the owners and staff, contribute to economic growth. Industry body the Institute of Grocery Distribution has said that the value of the convenience sector across the UK will grow from £35.6 billion in 2013 to £46.2 billion by 2018. That point is reinforced by the fact that, despite an increase in the number of other retail sector shop closures, convenience stores have not followed the same trend, with growth in the number of shop openings during January to March 2014 of 10 per cent.
A convenience store can contribute to the local economy. It is important to reiterate what previous speakers, including Gavin Brown and Mr MacDonald, have already said. Convenience stores contribute to the local economy by using local tradesmen, produce suppliers, shopfitters, garages, legal firms and accountancy firms. Added services and facilities in convenience stores may be a crucial reason why the sector is growing. They are very fleet of foot. With developments such as the introduction of click and collect, courier delivery, online shopping return services and secure ATMs, I hope that footfall will increase.
Independent convenience stores are primarily run by their owners. One third of those are women; one in 10 is under 30; 1 per cent are over 60; one in five has been in business for less than half a decade; and one in five of those business owners owns more than one shop. It is clear that a vast range of people are able to operate and develop their own store. That demonstrates the business opportunities in the sector.
More than three quarters of owners are of the first generation of their family to own or run a business. That creates sustainable jobs for generations of families as well as others in their community.
It is, of course, no easy life. Many hours of service have to be dedicated to ensuring customer access for the optimum number of hours, and a reasonable footfall is essential to earn any kind of living, let alone a good one.
Many consumers appreciate the importance of supporting local businesses, not just because of their proximity. Consumer trust in local shops continues to be consistently higher than that in supermarkets, for example. A survey of more than 7,800 shops run by independent corporate retailers reported that, despite competition from major supermarkets, local shops are
“as important to the community as the bobby on the beat”.
Customers become familiar with the staff in convenience stores, as Margaret McCulloch pointed out, and people often meet in them for a wee bit of a natter and a gossip. Many people are also attracted by the range and flexibility of the stock that local convenience stores can get in. They aid in developing growth in areas such as employment and the economy, and they have a very positive impact. They are a vital community asset, and they enhance community resilience, socioeconomic wellbeing, and the social value of enterprise and innovation. The importance of town and village shops to the fabric of Scotland should not be underestimated.
As we have heard, there are storm clouds on the horizon. Profits are being squeezed and there are increased costs, from energy costs to the costs of basic produce. In challenging times for all people in society, it can be very difficult for shop owners to pass on all increased costs to customers. As Mr Brown said, we should therefore look further to reduce the rates burden where that is possible. I am sure that the small business bonus scheme has been a tremendous success—we know that the Federation of Small Businesses said that, without it, one in six shops would have gone down the stank during the recession—but we should look to see how we can move on from there.
I reiterate what Gavin Brown said about smuggling. We need to take more action to ensure that that does not impact more on the profitability of our small business store sector.
18:17
I am very grateful to Gordon MacDonald for bringing before us this debate, which covers a matter of huge importance in every part of Scotland. I am also very grateful for the contributions of all members from different parties across the chamber. They recognise the significant role that independent retailers play in the economy; it is a very large role.
The retail sector has been quite resilient during the recession. It did not go “down the stank”, to use the technical expression that Mr Gibson brought to the proceedings; rather, it managed to overcome very well the buffeting of the recession. I am quite sure that that is partly because of the hard work and effort that managers and owners of those independent businesses brought to bear to ensure that they offer an efficient, friendly and effective service that provides goods, fresh food and a variety of grocery products that people throughout the country want. They give people what they want and run the businesses well on a family basis. I used to be one of them, as opposed to a politician—although I suppose that a politician is one of them, as well, in a different context.
I was a small businessperson and I remember the pleasures and anxieties of running a business. Being responsible for the livelihoods of a great many other people is a burden to bear, but that is a burden that independent retailers bear extremely well in Scotland, as the figures show. As has been pointed out, employment in the sector is substantial.
There are challenges facing all businesses in Scotland. The burden of taxation is one such challenge. Various members, starting with Gordon MacDonald, mentioned business rates, and that was a particular focus of Gavin Brown’s speech. We are pleased that we reinstated the uniform business rate in 2008, the year after we came into office. That ended an extra overtaxation of, I think, up to 8 or 9 per cent, and the change has made a contribution. I am also very pleased that we have had a measure of cross-party support for the introduction of the small business bonus scheme, which assists more than 92,000 businesses—two in five premises.
Gavin Brown puts his points reasonably. As he suggests, we want to do more—there is no question about that. That applies across the board, because business rates are a significant burden for a great many businesses. The rate must be paid irrespective of turnover. The sum is fixed and is based on the notional rental or the rateable value. The rate is a large and looming burden in running a business.
I say out of fairness and to be candid, particularly given that we know that some independent retailers are in the gallery, that I would be somewhat pleasantly surprised if they were eligible for the small business scheme. That is because the bonus is for the smallest businesses.
Mr Brown asked whether we could raise the thresholds and whether those thresholds could be stepped. On 11 December 2013, John Swinney announced an expansion of the small business bonus scheme by increasing the upper threshold for businesses with multiple properties from £25,000 to £35,000. That expansion was estimated to extend the benefit to more than 4,000 additional properties over this Parliament’s lifetime.
We also have more generous provision with regard to empty property relief than is available south of the border. Derek Mackay, the Minister for Local Government and Planning, has introduced a new incentive—the fresh start relief, which provides a 50 per cent rate of relief for 12 months when long-term empty property such as shops and offices become newly occupied. That would perhaps affect only a small number of businesses; nonetheless, it is there to encourage and promote additional economic activity in the retail sector.
Reference was made to regulations and red tape. The Scottish Government brought in the Regulatory Reform (Scotland) Act 2014, which I led on, and which will make all public bodies subject to the duty of considering the economic impact of what they do. That general principle is one whose introduction was long overdue. The duty is not yet in force, but we expect regulators in particular to act as though it were. Therefore, when taking decisions, public bodies must take account of the economic impact—how they affect existing business—and seek to ascertain how decisions that they take will affect businesses.
On town centre planning, in July my colleague Derek Mackay, along with the Convention of Scottish Local Authorities, announced the town centre first principle. Reflecting some of Gordon MacDonald’s remarks about supermarkets, the recognition of that principle acknowledges that, in some town centres, matters are very difficult. There are empty shops, a great number of charity shops and perhaps a lack of choice to individuals in many towns throughout the country. I will not name them, but that is a tendency that we have noticed. Therefore, the town centre first principle is a recognition that we need to redress the balance against the dominance of the supermarkets, as was mentioned by a great many members.
Margaret McCulloch mentioned new initiatives. We have the small business bonus scheme, the empty property relief and the fresh start property relief. We also have the business improvement districts and the town centre first principle. In one sense, I suspect that for most people in business here, those are, in practical day-to-day terms, probably not of much relevance. Also, people in business do not expect or want Government to come along with an occasional cheque, bung or grant. They do not want initiatives with handouts. I am sure that that was not what was suggested. Rather, they expect to run profitably, to run the show themselves and to offer a good service to their customers and thereby make a decent living, and to look after their staff well and provide appropriate training for them.
However, we in the Scottish Government are of course very keen to work with the representative bodies that have been referenced, including the Scottish Grocers Federation, representatives of newsagents and the Scottish Retail Consortium. Like my colleagues, I seek to have close relations with those bodies, and I will continue to do that.
To the independent retailers and their sector in general, I say that I have worked with individual businesses, not least in my constituency, to help them to access other services so that they can, for example, become a post office or retain their lottery ticket outlet, and so on. However, if there are general matters, initiatives or measures that are identified by independent retailers as creating barriers to success, I would be extremely happy to work with their representatives on that. I am grateful that Mr MacDonald has given me the opportunity clearly to make that pledge. I also support the initiatives that have been taken by the Scottish Grocers Federation recently in terms of healthy living and healthy food, which we very much welcome.
We have covered quite a wide range of topics this evening, but I think that what is most important is that all of us, across the different parties, expressed our support for and appreciation of the economic, practical and, as Margaret McCulloch said, social functions that smaller independent shops provide as they compete with the megaliths of the dominant supermarkets with their different practices, including purchasing practices. The smaller shops find it difficult from time to time to compete with them in those ways. However, by their personal, local, effective, high-quality service they have nonetheless proved to be very resilient in hard times. The message from all of us is this: Long may that continue.
Meeting closed at 18:26.Previous
Decision Time