Andrew Murphy: Holyrood, retailers must work together on tax

WITH 253,000 employees, retail is the largest private sector employer in Scotland. We are a dynamic industry – 13 per cent of new Scottish businesses formed last year were retailers – and one which delivers for indigenous manufacturers and food producers, providing a route to market for billions of pounds worth of Scottish product every year.

We’re also delivering for our customers. The rise of multi-channel shopping means customers can get what they want, when they want it, at a real-terms price which has never been better.

However, deflation, e-commerce and the rising power of the consumer have created significant challenges for retailers, profoundly disrupting traditional business models. Retail is becoming, structurally, a super-low margin enterprise – the direct outcome of becoming more capital intense (through the necessity of greater investment in technology) – while remaining, for the time being at least, labour-intense, with costs of labour set to inflate materially but prices subject to deflationary influences often beyond our control. The industry is undergoing its most profound change in 50 years.

One of the welcome consequences of the devolution of income tax and the assignment of VAT revenue is that the Scottish Government has as strong an incentive as us to nurture and grow the retail industry.

That provides a great opportunity for us to engage constructively, for mutual benefit, with the devolved administration and Holyrood parliament.

We are renewing that process today at our SRC parliamentary reception. The Scottish Government is prioritising a “national drive to promote productivity and innovation” – issues of great importance to the retail industry as well as the country. Consequently, the SRC is initiating a comprehensive study into productivity in the Scottish retail industry.

• Andrew Murphy is chairman of the Scottish Retail Consortium