Growth slowed for independent retailers in the third quarter of 2015 – even though they recorded their fifth straight quarter of positive trading, according to the latest survey from bira (British Independent Retailers Association).
More shops reported increased turnover than in any period since bira’s survey began – but the average increases they reported were the lowest across the same period. As a result, reported sales growth fell back to its lowest level this year, to 1.33%, from 2.35% in the mid-year period. Scotland and Wales led the way on growth, followed closely by the Midlands and East Anglia.
Figures from bira’s members – which include retailers in sectors as diverse as clothing, gifts, stationery, books and toys – show that the garden, machinery and tools sector lost a nine-quarter run of good results and handed its crown over to hardware and DIY, which continued its two-year run of growth – albeit with a figure of just 0.24%.
Pet products slipped 0.8%, but cookshop indies managed a 1.2% rise. Department stores stayed in growth, joined by clothing and footwear as well as giftware. But the furniture, floorcoverings and beds sector once again headed the success stakes, logging its fifth consecutive quarter of rising sales.
Bira also asked members what effect they thought the Living Wage would have on job numbers in their business by the time it reaches £9 per hour in 2020. More than half of respondents predicted that the result would be to reduce the numbers of jobs that they sustain, or the hours that they offer.
“Implementation of the Living Wage will have a major and negative impact on job numbers in small businesses like ours,” said one cookshop and housewares retailer in East Anglia. A cookshop and housewares retailer in the south-west added: “It’s quite possible that the wage increases will force closure after 33 years of business. Wages are our largest overhead and turnover has been declining steadily for many years, I do not foresee growth to fund the increases, and there are no further cuts that we can make.” A Midlands cookshop and housewares retailer noted: ”I shall probably pack up the business once the minimum wage goes up.”
A cookshop and housewares retailer in south-east/London pointed out: “We already pay above the rate, so by our normal salary increases we will still be ahead in 2020. Probably the government will fail to mention this as it would demean their intentions of saying what good chaps we are for getting more money for everybody.“
Bira stated: ‘Four years’ worth of compound 6% increases will build pressure consistently on costs, so sales growth will need to far exceed these levels if retailers are to avoid cutting staff numbers or hours. Closer to hand, if the Chancellor does not renew the current temporary discounts, lower rates and exemptions on business rates in the Autumn Statement on November 25, small shops will suffer huge increases in costs as early as April next year.’
The experience of a cookshop and housewares retailer in south-east/London supported this: “Sales are static or less than before, but costs imposed by Government are the most inflationary we face.” And a cookshop and housewares retailer in the Midlands commented: “It’s a big struggle to increase turnover in the current deflationary and economic circumstances.”
Bira members were also asked whether they thought local authorities should be given the power to extend Sunday opening hours. Bira said ‘the balance of opinion on devolving powers to extend Sunday trading to local authorities was clear – seven out of ten oppose the proposal’.