New Year's Day trading consultation - economic impact and impact on family life: report

3. Recent Trends for Retail Sector in Scotland

The retail sector is defined by the Standard Industrial Classification (SIC 2007) division 47 (Retail trade, except of motor vehicles and motorcycles). The retail sub-sector falls under the broader wholesale, retail, repair of vehicles sector as (SIC 2007) section G. Statistics are a mixture of both definitions but are shown for SIC 47 where possible.

The following data sets out the key economic trends for the retail sector in Scotland. It should be noted that due to the nature of some these statistical publications data lags exist and some figures may refer to different years or periods. The statistics set out in this note are the most recent data available at time of writing.

Monthly GDP^[1] (July 2021)

While the Covid-19 pandemic is first and foremost a health crisis, it has also had an unprecedented impact on businesses and the economy since March 2020. The public health measures introduced to contain the spread of the virus necessitated the temporary closure of many retail businesses during multiple lockdown periods and required others to restrict or change how they operate. Chart 1 below shows how severely the Covid-19 pandemic has affected Scotland's retail sector over the past year and a half in terms of GDP^[2]. Two significant dips can be seen as retail output fell 14.8% in April 2020 compared to March 2020 due to the first national lockdown and fell again in December 2020, however to a lesser extent (down 8.7% compared to November 2020).

In the retail sector, total output is estimated to have decreased by 0.9% in July 2021 compared to June 2021, following increases of 0.5% in June and 1.0% in May, and further increases of 5.0% in April and 1.6% in March. In regards to GDP, the retail sector as a whole has now recovered from the pandemic with output now 10.8% higher than 12 months ago (July 2020) and 4.8% higher than in July 2019, before lockdown measures were introduced. While the retail sector has bounced back according to monthly GDP statistics, it should be noted that there will be varying experiences at a business level.

The chart above shows the varying impacts faced by the two main sub-sectors of the retail sector during the Covid-19 pandemic. The predominantly food retail sub-sector saw an increase in output at the beginning of the pandemic (up 8.8% in March 2020 compared to February 2020) as consumers stocked up on groceries. The other retail sub-sector – which includes clothing and other retail stores that were required to close for some periods under the Scottish Government's Covid-19 restrictions – saw a decline in output of 17.9% in comparison (March 2020 compared to February 2020). Both sub-sectors have since seen a recovery with predominantly food retail reporting an increase of 2.4% and other retail an increase of 7.3% compared to July 2019.

In July 2021, the output of the Scottish onshore economy as a whole is provisionally estimated to have decreased by 0.2% compared to June 2021. This fall in output comes after increases of 0.8% in June, 0.9% in May, 1.9% in April and 2.3% in March. Despite these recent increases, Scotland's output remains 2.4% below the level in February 2020, prior to the lockdown measures.

Employment ^[4] (2019)

Sector	Employment	% Part-time Employees
Retail Trade, except of motor vehicles and motorcycles (SIC 47)	233,000	63.1%
Predominantly Food Retail (SIC 47.2 and SIC 47.11)	98,000	69.8%
Non-food/ Other Retail (SIC 47 excl. SIC 47.2 and SIC 47.11)	135,000	58.1%

In 2019, total employment in the Scottish retail industry was 233,000, accounting for 9.0% of all employment in Scotland. There has been no change in retail employment compared to 2018. The Scottish retail sector accounts for 8.1% of total retail employment in Great Britain (2,863,000 jobs in 2019).

63.1% of employees in the retail sector in Scotland worked part-time^[5] in 2019 compared to 34.0% of the total employee population. The proportion of part-time employees in the retail sector has remained broadly stable since 2015. Employees working in the predominantly food retail sub-sector (69.8%) are more likely to work part-time than those in other retail (58.1%).

• In Jan-Dec 2020, it was estimated that 94.5% of employees aged 16+ in the retail sector in Scotland were in contractually secure employment (employees employed on a permanent contract), slightly lower than all sectors in Scotland (94.6%)^[6].
• In Jan-Dec 2019, it was estimated that 13.9% of those working in the retail sector were self-employed compared to 12.4% for all sectors in Scotland^[7].

Turnover and GVA^[8] (2018)

The following official statistics for turnover and GVA^[9] refer to 2018 due to time lags in collecting and producing this data. The Scottish Government has developed timelier, experimental statistics such as monthly GDP to help track the rapidly changing picture during the pandemic.

In 2018, Gross Value Added (GVA) in the Scottish retail sector was £5.8 billion (7.9% of UK total), whilst turnover stood at £23.6 billion (6.2% of UK total). GVA in the Scottish retail sector fell by 7.9% between 2017 and 2018 (from £6.3 billion to £5.8 billion).

Retail is an important contributor to the services sector and was the largest services sector contributor to GVA in 2018 (excludes the financial sector and parts of the public sector). Within services, the three largest contributions came from retail trade [SIC 47] at £5.8 billion (10.2% of total services GVA), wholesale trade [SIC 46] at £5.1 billion (9.0%) and architectural & engineering activities [SIC 71] at £4.6 billion (8.1%).

The local authority areas contributing most to total GVA within retail in 2018 were Glasgow City (13.5%), City of Edinburgh (10.0%) and Aberdeen City (7.4%). These three local authority areas together accounted for around 30% of the business sites, 32% of employment, 31% of turnover and 31% of GVA in the Scottish retail sector.

Earnings^[10] (2020)

Median weekly pay – excluding overtime – for full-time employee jobs in the retail industry (SIC 2007 – division 47) in Scotland was £393 in April 2020. This is significantly lower than the equivalent median value across all industries and services in Scotland, which stood at £576^[11].

In 2019, 42.5% of employees aged 18+ in the Wholesale, retail, repair of vehicle industry (SIC Section G) earned less than the real living wage (£9.00), compared with 16.9% of all employees in Scotland.

Enterprises ^[12] (2020)

Sector	Number of Registered Businesses	Micro Registered Businesses (0-9 employees)	Small Registered Businesses (10-<49) employees)	Medium-Sized Registered Businesses (50-<249 employees)	Large Registered Businesses (250+ employees)
Retail Trade, except of motor vehicles and motorcycles (SIC 47)	13,790	11,930	1,300	245	310
Predominantly Food Retail (SIC 47.2 and SIC 47.11)	4,690	4,104	545	30	10
Non-food/ Other Retail (SIC 47 excl. SIC 47.2 and SIC 47.11)	9,100	7,826	755	215	300

In March 2020, 13,790 registered enterprises^[13] operated in the Scottish retail sector (SIC 47 - Retail trade and repairs). This is a rise from 13,715 registered enterprises in the prior year. Despite this recent increase the total number of registered enterprises operating in the retail sector in Scotland has decreased from 14,675 in 2014 to 13,790 in 2020. Two thirds (66%) of registered businesses in the retail sector were in the non-food/other retail sub-sector^[14].

Small enterprises (0-49 employees) accounted for 95.9% of businesses in the sector, but only 25.1% of employment and 18.1% of turnover. Large enterprises (250+ employees), which comprised around 2.2% of enterprises, accounted for 69.6% of employment and 76.8% of turnover.

Demographics of the retail sector^[15]

• Women are more likely than men to work in the retail sector. In Jan-Dec 2020, it was estimated that women made up 60.7% of those in employment aged 16+ in the retail sector in Scotland, up slightly from 60.5% in 2019.
• A comparatively high proportion of the workforce are young people. In Jan-Dec 2020, it was estimated that young people (16-24) made up 28.7% of those in employment in the retail sector in Scotland compared to 11.1% for all sectors in Scotland. In Jan-Dec 2019, it was estimated that 26.0% of those in employment in the retail sector were aged 16-24 compared to 12.3% for all sectors in Scotland.
• In Jan-Dec 2020, it was estimated that 28.9% of those in employment in the retail sector in Scotland were aged 50 or over compared with 33.0% for all sectors in Scotland. In Jan-Dec 2019, it was estimated that 25.6% of those in employment in the retail sector were 50 years old or older compared with 33.0% for all sectors in Scotland.
• In Jan-Dec 2020, it was estimated that 6.2%^[16] of those in employment aged 16+ in the retail sector in Scotland were minority ethnic compared with 4.5% for all sectors in Scotland. In Jan-Dec 2019, it was estimated that 6.4% of those in employment in the retail sector were minority ethnic compared with 4.3% for all sectors in Scotland.
• In Jan-Dec 2020, it was estimated that 27.9% of those in employment aged 16-64 in the retail sector in Scotland had a condition/illness lasting 12 months or more, compared with 27.2% of workers in all sectors in Scotland. In Jan-Dec 2019, it was estimated that 28.5% of those in employment in the retail sector in Scotland had a condition/illness lasting 12 months or more, compared with 27.5% of workers in all sectors in Scotland.
• In Jan-Dec 2019, it was estimated that 27.6% of those in employment aged 16-64 in the retail sector in Scotland were parents of dependent children aged 0-18, slightly lower than the share for all sectors in Scotland (31.8%).
• In Jan-Dec 2019, it was estimated that 17.2% of those in employment aged 16-64 in the retail sector in Scotland were Equality Act Disabled, higher than the share for all sectors in Scotland (13.6%).

Women-led SME employers (2019)^[17]

(Defined as controlled by a single woman or having a management team of which a majority were women.)

• 14% of SME employers in Scotland were women-led, broadly in line with the prior year (15%) and the UK as a whole (15%).
• 17% of SME employers in the Retail, Transport and Accommodation (SIC G, H & I) sector in Scotland were women-led.

MEG-led SME employers (2019)

(Defined as controlled by a minority ethnic or having a management team of which a majority are ethnic minority groups.)

• 4% of SME employers in Scotland were MEG-led, broadly in line with the UK as a whole (5%) and the prior year (2%).
• 6% of SME employers in the Retail, Transport and Accommodation (SIC G, H & I) sector in Scotland were MEG-led.