New report finds retail sector needs “urgent” government support

by | Oct 28, 2020 | News | 0 comments

Rangewell is calling on the Chancellor, Rishi Sunak, to introduce a tax holiday on National Insurance contributions for retail staff who are on furlough. This comes after the business finance expert examined the retail & wholesale sector’s economic data and found new restrictions could cripple the British High Street.

It is also asking the Welsh Government to issue grants of £250 to independent retailers who sell ‘non-essential goods’ so they can establish an ecommerce webpage – £250 is just under the average annual fee from online retailers’ platforms. This will allow the local shop to compete with mega tech retailers like Amazon, whilst they are legally obliged to be closed. 

Thirdly, Rangewell is calling on the Government to extend the backdated grant of up to £2,100 per month currently available to those firms working in the hospitality, accommodation and leisure sector in tier two areas of England and equivalent funding for other nations, under the Barnett Formula to Retail businesses. 

Analysing the Office for National Statistics’ sector-specific monthly GDP estimate, Rangewell has learned that the GDP data shows when restrictions were at their highest during the lockdown, the sector was 38% down from its February output. By July, the sector had bounced back to its February levels. 

When reviewing the ONS’ Retail Sales Volume and Footfall, Rangewell finds that in October, the overall footfall decreased to below 70% of its level in the same period of last year and the proportion of online spending peaked during lockdown and still remains higher than in February. In September 2020, retail sales volumes increased by 1.5% from August; this is the fifth consecutive month of growth. In the three months to September, retail sales volumes increased by 17% when compared with the previous three months; this is the biggest quarterly increase on record as sales picked up from record-low levels experienced earlier in the year.

Rangewell also looked at the ONS’ survey into financial support for businesses in the Retail & Wholesale sector. It discovered that 73% of workers in the sector returned to working at their normal place of work by 22 October, while only 50% of businesses in the retail & wholesale sector applied for the Coronavirus Job Retention Scheme. Only 47% were successful when they applied to the government-backed accredited loans. Of those who applied to a Government-backed scheme, 88% found it helped them to continue trading, and 88% did not receive financial assistance from banks or building societies. Of those who did gain funding from a bank, 98% said it helped their business continue trading.

Nic Conner, who authored the report and is Rangewell’s head of research, said: “Our high streets are in crisis. There needs to be urgent action taken to save our community of shops. The further restrictions could be crippling to independent store owners, many of whom, without support, will be forced to shut up shop.

“Like many businesses, the retail sector saw a drastic drop in economic output when, on the whole, they were legally obliged to close. When the restrictions lifted and footfall increased, the sector’s GDP bounced back to February levels, but were still below the previous summer’s performances.

“Frankly speaking, the way shop owners have been treated since the lockdown has not been good enough.  The Government has to step up its support of the Great British high street.

“We are calling on Mark Drakeford to urgently and immediately step up his support for independent retailers in Wales.

“As Welsh shops are forced to close and are forbidden to sell a host of designated non-essential goods, mega tech retailers like Amazon take their custom. The ONS data shows that online spending remains higher now than before the lockdown. This is why we are calling on the Welsh Government to issue grants of £250 to independent retailers so they can establish an ecommerce webpage, not only so they can compete with Amazon while they are shut, but so they can lay the foundations for the ‘new normal’.”

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