Getting the Right Change – retail strategy for Scotland

Chapter 1 - Setting the Way Forward

1.1 Our Vision for Retail in Scotland

Retail matters. It matters because we all, at some time, want to buy the things that retailers sell. It matters because the retail sector is a major contributor to economic prosperity in Scotland. It is the largest private sector employer, with over 240,000 people working in Scotland in 2020^[1] and annual turnover £23.1 billion in 2019.^[2]

With almost 14,000 retail businesses, Scotland has more stores per head than the rest of the UK,^[3] making the market a very competitive one. Retail provides vital jobs in all parts of Scotland – city centres, high streets and small and island communities where the local shop is often the provider of lifeline products. It plays an integral role in our society, providing customers an opportunity to interact and engage with others in their communities and in actively supporting local and national good causes. Retail can take many forms, such as smaller boutique outlets, big name chain stores, inclusive enterprises, pop-up shops and online marketplaces.

Those are all compelling reasons why a successful and profitable retail sector is important – for our people, our communities, our towns and cities and our national economy.

The retail sector has an essential part to play in addressing our macroeconomic challenges and helping to build a strong economy. Our vision for retail is one that was agreed by industry, trade unions and government in developing this strategy:

That Scotland’s retail sector will thrive through a process of positive change and innovation, offering people and communities the quality goods, experiences and services that they want.

That the retail sector will embrace business development opportunities to foster sustainable growth; protect the environment; cultivate entrepreneurship; strengthen supply chains; support wellbeing; and ensure that retail offers secure, well-paid and rewarding employment.

That the Scottish Government will work in partnership with the sector, trade unions and employees, whose experiences are crucial, to help the retail sector in Scotland become an exemplar for inclusive economic growth and play its part in creating a fairer, greener and stronger Scotland.

In developing this vision, our shared ambitions for a prosperous retail sector have translated into a suite of actions under the themes of Sector, People, Place and Just Transition.

Vision: That Scotland’s retail sector will thrive through a process of positive change and innovation, to help the sector become an exemplar for inclusive economic growth and play its part in creating a fairer, greener and stronger Scotland.

Priority Areas - Sector

Aims - A successful and profitable sector, by being more productive and innovative, and encouraging, promoting and celebrating entrepreneurial activity and business growth.

Priority Areas - People

Aims - A sector of people with the right skills to have rewarding and secure careers and grow businesses as we reorient our economy towards wellbeing and Fair Work to significantly reduce poverty.

Priority Areas - Place

Aims - To strengthen the vital contribution that retailers make to the economic and social success of our local communities.

Priority Areas - Just Transition

Aims - To ensure a Just Transition for the retail sector, one that protects jobs and benefits the environment, our people and our economy whilst addressing the challenges around sustainable retail practices that contribute to reaching net zero emissions by 2045.

Delivery: Establishment of an Industry Leadership Group to take forward actions identified in the retail strategy and address the key opportunities and challenges facing the sector.

1.2 Building on Our Strengths

The retail sector is extraordinarily resilient. As we have seen in recent years it is adaptable and willing to refocus and restructure in order to succeed. It has responded to the growing demand for online retailing and other changing consumer demands with sectoral GDP back to pre-pandemic levels.^[4]

Retail plays a fundamental role in our communities by providing employment, supporting local supply chains and delivering significant economic benefit to the Scottish economy which in turn benefits all people. Retailers want to succeed and grow and create customer confidence and loyalty through providing a quality service.

A successful retail sector is a vital component to achieving our vision for Scotland’s economy. Through its suite of five policy programmes, with a separate Delivery Programme at the core, the National Strategy for Economic Transformation (NSET) highlights the opportunities that lie ahead for our people and our economy if bold action is taken now. It sets out both the aim and programmes through which, by 2032, Scotland’s economy will outperform the last decade, both in terms of economic performance and tackling structural economic inequalities.

In publishing Scotland’s Strategic Framework refresh the intent is to provide that longer-term certainty for businesses as they look to rebuild after Covid-19. Enterprises are able to plan with more confidence in an economy where there is stability and growth.

Our Covid Recovery Strategy outcomes are: financial security for low income households; the wellbeing of children and young people and good, green jobs and fair work. In this retail strategy, we have set out an ambitious vision and plan for retail as it recovers and rebuilds from the pandemic that is forward-looking and is focused on bringing about a fairer future for all.

Alongside these national strategies sits our ambitious programme for Community Wealth Building, a people-centred approach to local economic development which seeks to ensure more wealth is less extracted, but rather more redirected back into the local economy: increasing general income by giving people a greater stake in the wealth they produce and thus reduce inequality.

Supporting all retailers to align with a Community Wealth Building approach is important. This includes local ownership and hiring of staff, adoption of Fair Work practices, engaging with community organisations and considering local enterprises within the supply chain are important elements. This helps to ensure that local people and businesses have a genuine stake in producing, owning and enjoying the wealth they create, moving us closer to the more just, equitable and sustainable society we want as we rebuild our post-Covid-19 economy in Scotland.

In addition, reinforcing consumer trust is integral if retail businesses are to succeed. The Scottish Government has begun action to advocate on behalf of Scottish consumers, especially those who use online deliveries, through the launch of fairdeliveries.scot. The passage of the Consumer Scotland Act 2020 through the Scottish Parliament will ensure that the new consumer body, Consumer Scotland, represents the views of consumers and takes an evidence-based approach to tackling the most serious issues of consumer harm in Scotland.

1.3 Facing the Challenges

There are of course tensions to resolve. We want to stimulate economic activity, increase productivity and grow GDP within the sector in a fair way, without adding to carbon emissions or impacting negatively on the global ecology.

The last two years have been challenging for retailers and their employees. Lockdowns and public health protection measures, increased demand for home deliveries, changing footfall patterns, EU exit, stretched supply lines, labour market shortages, and the rising cost of living have all created a marked difference in how retailers have been able to operate. Despite the retail sector in Scotland being highly competitive, offering a wide variety of goods, prices and services, these factors have had a combined knock on consumer confidence. We acknowledge these challenges, while also recognising that the sector has shown incredible resilience to adapt to these circumstances and show signs of recovery.

During these exceptional and trying times, government support provided lifeline funding for many – particularly small businesses. Since the start of the pandemic, over £4.5 billion has been provided by the Scottish Government to help businesses come through this difficult trading period. As we enter into a more steady state, the actions in this strategy are intended to support retailers as they reassess, re-evaluate and regenerate their businesses as we rebuild after Covid-19.

1.4 Collaboration

The challenge is to foster conditions for a vibrant and enticing retail proposition that aligns to the way people live their lives post-Covid – but to do so in a way that positively contributes to our net zero ambitions and which promotes good quality, secure employment. Government cannot deliver this alone; neither can the sector in isolation. Our vision can only be achieved by national and local government, the sector, our agencies and trade unions working together.

Through collaboration with the sector and trades unions – which commenced in developing this strategy – we will together be able to meet these challenges and deliver our vision of a successful retail sector in Scotland.

This retail strategy has been co-developed by a Steering Group of industry representatives, trade unions, academic and public sector delivery professionals, chaired by the Minister for Public Finance, Planning and Community Wealth. The steering group met throughout 2021 and identified the following priority areas:

Sector – successful and profitable, by being more productive and innovative, and encouraging, promoting and celebrating entrepreneurial activity and business growth.

People – are at the heart of the retail sector, with the right skills to have rewarding and secure careers and grow businesses as we reorient our economy towards wellbeing and Fair Work to significantly reduce poverty.

Place – strengthening the vital contribution that retailers make to the economic and social success of our local communities.

These three workstreams are the foundations upon which this retail strategy has been built. Separate sub-groups were established to delve deeper into each priority workstream of Sector, People and Place, chaired by industry, trade unions, and academic leads respectively. Each workstream submitted proposals which have been distilled into actions.

Throughout each of the workstreams was woven the common thread of sustainability, acknowledging the scale of work required to meet our ambitious climate change targets. To this end a Just Transition plan will be developed and a suite of supporting actions is set out alongside the actions relating to Sector, People and Place.

In developing this strategy, the importance of adaptability and resilience needed to meet future challenges in a changing world was a recurring view. That is why this strategy is a living document – while we highlight key actions and priorities, these are not the limits of our ambition. This strategy must be able to flex and refocus as needed. Neither government nor the sector alone can address all the challenges ahead; that requires a collaborative approach, along with trade unions, to determine and agree the right way forward.

This collaboration will take place through the establishment of a sector-led Industry Leadership Group (ILG). The group will be co-chaired between Scottish Ministers and the sector, with industry representatives taking an active role in delivering the vision of this strategy. The commitment to an ILG underlines the importance of businesses, industry representatives and employees working together to tackle the challenges and grasp new opportunities.

Steering Group Membership

David Lonsdale

Director, Scottish Retail Consortium

Dr John Lee

Head of Policy & Public Affairs, Scottish Grocers’ Federation (SGF)

Tracy Gilbert

Regional Secretary, Union of Shop, Distributive and Allied Workers (USDAW)

Robert Deavy

GMB Scotland Organiser, GMB

Professor Leigh Sparks

Deputy Principal and Professor of Retail Studies, University of Stirling

Andrew McRae

Policy Chair, Federation of Small Business (FSB)

Hugh Lightbody

Chief Officer, Business Gateway

Katie Hutton

Director of National Training Programmes, Skills Development Scotland

Fiona Richardson

Chief Officer, Trading Standards Scotland COSLA

Colin Smith

Chief Executive, Scottish Wholesale Association (SWA)

Lucinda Bruce-Gardyne

Founder, Scotland Food and Drink and Founder of Genius Foods

John Brodie

Chief Executive, Scotmid Co-operative

Kathy Murdoch

Centre Manager, Buchanan Galleries

Andrew Murphy

Chief Operating Officer, John Lewis PLC

Emma Parton

Director, The Highland Soap Company

Reuben Chesters

Project Manager, Locavore Community Interest Company

Andy McGeoch

Chief Executive, M&Co

Keith Irving

Chairman, Castle Douglas Food Town Initiative and Owner of Irvings Homestyle Bakery Ltd

Lindsay Methven

Senior Manager, Scottish Enterprise

Neema Rathod

Policy Adviser, Scotland Office

Carron Smith

Principal Officer, Falkirk Council, SLAED

Jack Evans

Scotland Policy and Partnerships Manager, Joseph Rowntree Foundation