Referendum blamed for ‘stagnating’ Scottish retail

The Scottish independence referendum may have contributed to Scotland's growth being less than England. Picture: JP
The Scottish independence referendum may have contributed to Scotland's growth being less than England. Picture: JP
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UNCERTAINTY over the outcome of this year’s independence referendum has been blamed after new research showed that the number of retail firms opening for business in Scotland is trailing behind the rest of the UK.

While figures from business information provider Creditsafe showed almost 10,000 retailers set up shop during the past 12 months, the firm said that the sector was “stagnating” north of the Border.

Glasgow and Edinburgh were ranked in 23rd and 44th place respectively in the overall rankings of retail expansion, while Croydon in south London witnessed the greatest increase, with an extra 537 enterprises operating compared with a year ago.

Scottish locations dominated the “top ten” centres of retail decline and limited growth, according to the Creditsafe data.

Paisley came third in the ranking of areas suffering a contraction, with two fewer retail businesses operating than a year ago, although south-west London and Guildford topped this table with declines of 187 and 64 respectively.

Inverness and Kirkwall each lost one active company, while numbers in the Western Isles and Lerwick remained static. Dundee gained three retail enterprises, while Kirkcaldy saw eight open their doors to customers, but that could not prevent the Fife town from taking tenth place in the list of worst performers.

The Creditsafe research comes just days after the Scottish Retail Consortium (SRC) revealed a fall in sales for November, despite a rise in the number of people taking to the country’s high streets in search of pre-Christmas bargains.

Footfall was boosted by heavy discounting as more stores embraced the US import of Black Friday price cuts, but that did not translate into an increase in overall transaction values, with like-for-like sales down 2.6 per cent compared with a year earlier.

Clothing and footwear retailers continued to suffer last month amid the unseasonably mild weather, while food sales witnessed the seventh consecutive month of declines as supermarkets slash prices in response to the challenge from discount chains Aldi and Lidl. Despite the challenges being faced by the major grocers, Creditsafe said the financial health of the sector as a whole was “looking positive”. Just 5.5 per cent of active companies were rated by the firm as “high” or “very high” risk, which it said was a far lower proportion than other industries such as recruitment.

Firms leasing properties to retail tenants have also seen a marked decline in late or defaulted rent payments, suggesting healthier cash flows. The proportion seeing stores attempting to renegotiate their lease terms has also fallen, from 75 per cent a year ago to 65 per cent, although this remains a “significant figure”.

Rachel Mainwaring, operations director at Creditsafe UK, said: “The last 12 months have seen a significant uplift for the retail sector after a difficult 2013. The health of the retail industry is often taken as a barometer of consumer confidence, so these figures support the argument that people are starting to open their wallets and spend.

“There is, however, a divergence between the rate of growth in England and Scotland. The rate of expansion in Scotland is far lower on average than in England, which may indicate the referendum had an impact on business confidence and investment in this sector.”


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