AS I SEE IT: Terry Murden on businesses refusing to be beaten… and contrasting retail patterns in Scotland’s biggest cities
According to the World Bank and the International Monetary Fund a global slowdown looks inevitable, and there is talk of the UK entering recession before the year is out. Bank of England Governor Andrew Bailey admits that his colleagues are caught between hiking interest rates to control inflation and knowing that doing so could cause more problems than it solves. Meantime, it seems, at least from anecdotal evidence, that businesses will not go down without a fight.
In Scotland, GDP is holding up, with output growing by 0.4% month-on-month in February, to be 1.3% above its pre-pandemic level two years earlier. However, that was before the war in Ukraine kicked off and everyone is aware that its impact could be devastating for the global economy.
At company level, there is a determination to just keep going. Brexit was supposed to have shredded the economy (at least that’s what the SNP claimed), and the pandemic was expected to finish off what was left, but businesses seem to have found ways to cope.
Even the hard hit hospitality sector is getting back on its feet and is said to be benefiting from the switch of discretionary spending by cost-of-living conscious consumers who may have put some of their grander plans on hold but have cheered themselves up with a few beers and a beefburger.
SMEs, who keep hearing are the lifeblood of the economy, are increasingly pessimistic about the overall outlook, according to a survey from accountancy firm Azets, but they retain a belief in their own prospects and are still going for growth.
Interestingly, firms have learned from the pandemic to “pivot” their business model, switching the way they work, or even what services and products they sell in order to keep their heads above water. This may be “survival mode” but it provides a huge foundation on which to build when the economy does start to properly recover.
A tale of two cities
New images have emerged from the planned redevelopment of the St Enoch Center area of Glasgow into a new open air community, notably with fewer shops. If things go to plan, the Buchanan Galleries will also be demolished, making way for a similar “mixed use” development of shops, leisure and housing.
These plans are clearly a response to the way in which the retail axis has tilted away from physical shopping, but they do stand in huge contrast with retail expansion in Edinburgh. Barely a week goes by without a new store opening in the St James Quarter. It is now home to a number of brands which have made it their first location, either in Scotland or the UK.
So which city has got it right? Ironically, Glasgow was traditionally Scotland’s big retail destination, with the famous style mile second only to London’s Oxford Street. St James is trying to pinch the retail crown, though it may sit unsteadily on its head, particularly as consumers tighten their belts and recession lurks around the corner.
When St James opened last year I said it looked a little like a mall fit for the 1980s, and some of the stores do seem to have more staff than shoppers.
The latest figures for March show UK retail sales have fallen by steeper than expected, down 1.4% on February, and the FTSE 350 retail sector has declined by 22% in value so far this year.
Two of the bigger fallers were Moonpig and Marks & Spencer, both showing how spending has switched away from non-essentials such as greetings cards and clothes.
While Glasgow may have gambled early on the need to change tack, its plans are over a 20 year term during which the city center has to find a way to get its mojo back. A £16m deal just announced for a chunk of Buchanan Street may sound a note of optimism, but Sauchiehall Street, Princes Street in Edinburgh and Union Street in Aberdeen need more than a little TLC.
Whoever occupies the town hall seats after 5 May needs to start getting real about the challenges that retail is facing and get down to some hard discussions with the Scottish government about some quick remedies. Stop penalizing motorists, cut the price of parking, repair the paving and roads, remove weeds and litter, speed up planning processes and use the tax system to entice rather than deter investment and tenancies.
As for the retailers themselves, do something about the way you present yourselves. A scruffy shopfront and dismal displays are not the way to encourage anyone to abandon their laptop.
Terry Murden held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business
> Latest Daily Business news