Will 2015 end in commercial success for small retailers?

posted by 4 years ago in Features

The rise of pop up shops, e commerce, bag charges, tax avoidance and an imminent decision about whether to relax Sunday trading laws have made 2015 an eventful year so far for small and medium sized retail businesses. With Christmas around the corner the dynamic sector is gearing up for, what industry insiders hope will be a busy festive period for the high street. So how is the landscape of UK retail changing, and what does it mean for traders?

Pop up shops are hijacking the high street…

Almost a third of new businesses launched in the UK over the next two years will start as a pop up according to a study by telecoms company EE. The phenomenon, which was originally promoted by TV retail advisor Mary Portas in response to the 2008 recession, has been seen as a way to regenerate the high street and fill empty premises. Since then the rising popularity of the temporary retail outlets has been put down to the lack of long term financial commitment with fees as low as £150 for two weeks trading. In fact, many online retailers have dipped their toe in the water by setting up their own pop up shops in a bid to establish a name for themselves with customers. It’s widely perceived that pop ups create a buzz on the high street with the temporary retailers doing everything they can to increase footfall and, as a result, have a positive knock on effect for established small retailers. It remains to be seen whether the rise of the pop up will signal a sustained boost or if they are a novelty that will fizzle out with time as the temporary retailers make a name for themselves and continue to keep their overheads down by trading online. It’s hoped by many that the rise of pop up shops will signal a return to traditional bricks-and-mortar shopping behaviours.

The debate about Sunday trading continues…

Plans to extend Sunday trading times in England and Wales were outlined by Chancellor George Osborne in his July budget. These were scheduled to be voted on in the Commons this week during the Cities and Local Government Devolution Bill. However, the plans were dropped by the Prime Minister at the last minute after it was revealed that an alliance of MPs from the Conservative, Labour, SNP and DUP parties were planning to vote down the measure. So do they have the best interests of small and medium sized retailers in mind or is it a tactical move aimed at preserving tradition? The idea behind relaxing the laws was in order to give high street shops a greater chance of standing up to online retailers in terms of usability for customers. However, critics have argued that, instead of helping smaller shops and local high streets, the changes would further benefit large out of town shopping centres instead. There is also concern for workers of small retailers and their families due to the opinion that a change in trading times will drive down wages as no pay safeguards have been offered by the Government. Another argument against the deregulation is that it will create chaos for shoppers and workers as every local authority will be able to set their own trading times.

SMEs yet to be carried away with bag charges…

October saw the introduction of charges for plastic carrier bags in large shops and supermarkets. However, retail SMEs were exempt from the scheme prompting criticism from environmental charities and organisations such as Friends of the Earth who claimed the charges should be carried out by all retailers no matter what their size. They have highlighted that surveys, carried out by them, show that convenience store owners are in favour of rolling out the scheme to include all retail outlets. The Chamber of Commerce have made it clear that SMEs can opt into the scheme which aims to reduce litter and protect wildlife. Indeed some retailers have decided to charge customers, however others have expressed concern that the plastic bag fees put additional pressure on them with mounting paperwork and the concern that they will face fines of £100 if they don’t supply records of their carrier bag intake. These concerns would appear to match research by the Association of Convenience Stores which represents more than 33,500 local shops. They stated that only 8 thousand were planning to introduce the bag charges – that’s just 24 per cent. However, they also claim that, since being introduced in Wales, the 5p levy has been largely positive for SMEs by reducing costs and increasing involvement with local charitable and community projects.

Local councils to set business rates…

There was shock throughout the business community when Chancellor George Osborne announced local authority set business rates in his speech to the Conservative party conference in Manchester. Councils will have the authority to cut or raise interest rates and keep 100 per cent of them rather than 50 per cent with the rest going to Whitehall. George Osborne called the changes ‘the biggest transfer of power’ in recent history. However, how have SME retailers responded to the plans? There is optimism that local authorities might work harder to increase footfall into centres and drive up competition and income. However there have been concerns expressed that local authorities might be tempted to increase rates because of financial pressure. It’ll be interesting to see how the changes will affect retail SMEs when they are brought into force.

Local traders are standing up to online giants on tax avoidance…

It looks like the Powys tax rebellion, led by small retail businesses from the high street in Crickhowell, Wales could spread nationwide. Traders including the optician, bakery and book shop turned the tables on the world’s biggest companies including Google and Starbucks by employing the same offshore accountancy practices as them in a tax avoidance scheme. The family-run businesses have submitted their own tax plan to HMRC copying the global brands who, through their offshore arrangements, pay little or no corporation tax. They’re now hoping to share their plan with independent retailers nationwide in an effort to force the Treasury to close the loopholes which allowed companies like Amazon to pay just £11.9 million of tax last year on £5.3 billion of internet sales in the UK.

Police issue warnings about Black Friday…

It’s not difficult to understand that everyone likes a bargain – particularly around Christmas time when Santa’s lists threaten to get out of control. However, when police issue a warning to shops to ensure they have enough staff to cover a potential stampede then it’s probably time to take stock (not literally!). The promotion that’s come over from the US in recent years is expected to be bigger than ever in 2015 with forecasters claiming one in five British shoppers will be attracted to the deal day which is on 27th November this year. British shoppers are expected to spend £1.07 billion according to research from Experian and e-retail industry association IMRG. It remains to be seen whether small retailers can tap into that fund. The Royal Mail have published research warning that many SMEs are underprepared for the big event and are likely to struggle with increased web traffic and delivering goods on time.