Restricting promotions of food and drink high in fat, sugar or salt: business and regulatory impact assessment - partial

ANNEX B: Potential Impact of Exemptions by Floor Space Using Employees at Individual Store as a Proxy

This annex analyses the distribution of business sites (i.e. individual stores) by the number of employees at each store. This is the best representation of the physical size of each store out of the three options, and therefore the most relevant to considering the potential impact of exemptions based on store size. The same descriptive analysis can also be undertaken for the number of businesses rather than sites, and also the number of business sites by the total number of employees in the overall business.

Key Findings

• The business statistics data highlights that while the vast majority of business sites – i.e. individual stores – are micro and small, they are responsible for a much lower share of the total turnover in the industry. This illustrates that people spend a significantly larger amount of money in the larger stores as would be expected.
• When comparing across rural and urban areas, retailer business sites are relatively smaller in rural areas, although the distribution of OOH stores is similar. A much larger share of the total turnover (of retailer and OOH) comes from micro and small business sites in rural areas.
• Across SIMD quintile, there appears to be a distinct pattern in the distribution of business sites across quintiles 1-3 (the more deprived areas) compared to quintiles 4 and 5 (less deprived), in terms of the number of stores by size and the share of turnover.

Business sites and turnover in Scotland

Source: Scottish extract of the Inter-Departmental Business Register, unpublished (obtained via the Business & Innovation Statistics team)

For retailers in Scotland, 8,910 of retailer business sites have fewer than 50 employees based at them. This represents 96% of the total number of retailer business sites in Scotland. 6,435 of these sites had fewer than 10 employees, which is 69% of the retailer total. See Table B.1.

For OOH in Scotland, 15,540 of the OOH business sites have fewer than 50 employees based at them. This represents 97% of the total number of OOH business sites in Scotland. 11,020 of these sites had fewer than 10 employees, which is 69% of the OOH total. See Table B.1.

The share of overall turnover from business sites which have fewer employees is smaller highlights that while these business sites make up the vast majority of stores, they also have much smaller sales compared to business sites which employ over 50 people.

For retailers in Scotland, £9,779m in turnover comes from business sites with fewer than 50 employees. This represents 49% of the total retailer turnover of almost £20 billion. £2,741m of the retailer turnover comes from business sites with fewer than 10 employees, this is 14% of the total retailer turnover.

Urban and Rural

For retailer business sites, there is a clear difference in the distribution of business sites by size in urban and rural areas. Rural areas have smaller business sites, with 77% of retailer sites employing fewer than 10 people, compared to 68% of business sites in urban areas. In urban areas, 5% of retailer business sites employ over 50 people compared to only 1% in rural areas. See Table B..

In the OoH sector, the distribution of business sites by size is more similar across urban and rural areas. There is a slightly larger share of OoH micro sites (69%) in urban areas compared to rural areas (67%), which is countered by a slightly lower share of small OoH sites (28%) in urban areas compared to rural (31%).Table B.3.

Turnover data is at the urban and rural level is more limited due to potential disclosive reasons. The figures are available by business site size at the overall level (i.e. total of retailers and OoH). The share of turnover in micro and small business sites – i.e. fewer than 50 employees - is much larger in rural areas than urban areas, at 72% and 53% respectively. See Table B..

Scottish Index of Multiple Deprivation (SIMD)

Across all the potential business sites in scope, there is a pattern of the smallest stores being relatively more prevalent in more deprived areas. The trends are most apparent in the shifts between the share of micro and small stores as you move between SIMD quintiles, reflecting that this is the size of the vast majority of business sites. See Table B.5.

In the most deprived SIMD quintile, 59% of the total turnover comes from micro and small business sites which employee fewer than 50 people. This compares to 49% of revenue in the least deprived quintile which comes from micro and small stores. The share of each quintiles turnover which comes from micro stores employing fewer than 10 people is relatively similar across the first three SIMD quintiles, between 18% and 20%), but is distinctively smaller in the least two deprived quintiles (15% and 12%). See Table B.6.

Convenience store data

The Association of Convenience Stores and the Scottish Grocers Federation estimate that there are 5,098 convenience stores in Scotland. Of these, 1,070 have a floor space of over 2,000 square feet. This is equivalent to 21% of the convenience stores.

Official business statistics data is not available which only includes convenience stores, which would allow us to make an assessment if using employee numbers per business site is an appropriate approximation for they physical size of the store, or what the most appropriate number of employees would be to approximate for stores over 2,000 square feet.