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retailers urged to take optimistic view despite headwinds

by Ozva Admin

That was the key message to emerge from the Scottish Grocers Federation 2022 annual conference, which took place in Glasgow this week (October 6-7).

Despite factors such as declining cost of living, high salary costs and spiraling energy bills, attendees were reminded that in adversity, there is often opportunity.

Simon Hannah, chief executive of Glasgow-based wholesaler JW Filshill, urged retailers to take an optimistic view.

Convenience stores had enjoyed big surges in footfall during the Covid-19 pandemic and many of those customers had stayed on, he noted.

Lower living costs could also benefit the sector, he said, as people are likely to cut back on eating and drinking outside the home.

“The cost of living crisis will drive more people closer to home. Staying will be the new way out and discretionary spending will remain a challenge. As a result, convenience has the opportunity to position itself differently.”

Mike Watkins, head of trade and retail insights at analyst NielsenIQ, also struck a positive note.

He pointed to the continuing shift from large “hypermarkets” to smaller format stores as consumers continue to shop “little and more often.”

“Twenty-five percent of households still want to shop at their nearest store,” he said.

Recent data from NielsenIQ shows that spending in supermarkets decreased by 2.1%, while convenience services increased by 2.6%. “The influx has shifted to local stores,” he said.

But he added that convenience stores needed to continue to evolve, away from reliance on traditional impulse categories such as tobacco, confectionery and soft drinks, and into areas such as fresh, chilled, frozen and takeout.

“Those who cater to a variety of occasions will be the ones to thrive,” he said.

SGF Chief Executive Pete Cheema said retailers were working hard to try to protect their customers from rising costs but now had little room to maneuver and were forced to raise prices.

“We simply cannot afford to absorb the increase in supply costs,” he said.

Cheema urged the UK and Scottish governments to extend support to local shops, including continuing help on businesses’ energy bills beyond the initial six-month period.

He also called for corporate tax to be reduced to 15%, “so that companies can reinvest more of their cash”, and a moratorium on any new legislation that negatively affects the convenience sector.

Scottish stores are currently facing the introduction of the UK’s first Deposit Return Scheme (DRS) on drinks packaging, due to come into force on 16 August 2023.

Cheema said he was “aggravated” that retailers’ concerns about the level of handling fee to be paid to shops participating in the scheme were not being heard, either by the Scottish government or by Circularity Scotland, the company created to run the scheme.

He added: “The industry is resilient, it’s agile and it’s forward-thinking. We make a unique contribution to the Scottish economy and local communities.

“Independent convenience stores are a critical community asset. They are owned and run by local people who care about the positive impact they have on the local area.

“But they need to be able to make a living if they want to continue.

“They need urgent and tangible support from the government, not platitudes.”

Tom Arthur MSP, the Scottish government’s public finance minister, whose mandate includes retail, said the country already had the most generous package of fee relief for small businesses in the UK, adding: “We’re doing everything we can.” we can within the powers and resources available. for us.”

On the DRS, he said the government was “determined to work with business to ensure practical and workable solutions are in place.”

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