Independent retail can still be an opportunity

HIGH STREET: Multi channel selling could be key to success for retail investors

Retail sales are showing signs of recovery as Scotland progresses through its path out of lockdown. The high street was already suffering from a decline in sales pre-lockdown due to increasing competition from online retail and other pressures. In this article, we consider some of the challenges you may come across and how to overcome them. With government-ordered closures of non-essential shops, investing in e-commerce technology has become more important than ever. Recent research has shown that more consumers are making a permanent move to online shopping due to the perceived health risks of shopping in store, and businesses are being challenged to adapt their services to facilitate online sales and stay relevant. This is a good time to consider developing an online shop to support your business and connect with customers over multiple channels. Many retailers are also considering in-store automation technology to reassure nervous consumers and reflect the convenience of shopping online. Investing in automation technology is certainly one way to combat the increasing competition from online shopping. In considering where to set up your business, location is often key. Footfall in town centres has dropped dramatically since the coronavirus outbreak and consumers are favouring local shops in residential areas in a bid to support their local communities. If you depend on footfall or passing trade, this is definitely something you should take into consideration. Another key decision to make is whether to buy or rent your premises. Buying a premises involves a greater capital investment upfront, although you would ideally have the opportunity to gain this back in the future, either by renting the premises out long-term or by selling it on for profit. One of the benefits of buying your premises is that repayments can be more predictable than rent increases and you are also in control of what you can do with the property. Leasing a premises can give you more flexibility. It can also be a more affordable option as there is often no capital down payment. Many commercial leases require the tenant to take on full responsibility for repairing and maintaining the premises, and we recommend you take legal advice before signing up to any potentially onerous obligations. As with buying a house, purchasing commercial property will attract Land and Buildings Transaction Tax (LBTT). Taking on a commercial lease may also attract LBTT, particularly if the lease is longer than seven years or has a high annual rent. Some owners or landlords opt to charge VAT on commercial properties, so your purchase price or rent may be subject to an additional 20% charge. VAT is also taken into account when calculating LBTT, and so it is worth taking advice from a solicitor and accountant to see if tax liabilities can be mitigated. Non-domestic rates are a tax on nondomestic properties to help pay for local council services. Broadly, these are based on the square footage of the premises, with different weights being given to usable retail spaces and backshop areas. The Scottish Government has made changes to non-domestic rates (business rates) for 2020-21 to help owners of non-domestic properties, including businesses, deal with the impact of Covid-19. Retail, hospitality and leisure businesses will get 100% rates relief, provided the property is occupied. You do not need to do anything to apply for this relief – it will be applied automatically to your bill.

Investing in automation technology is one way to combat the increasing competition from online shopping. EWAN MILLER

High street footfall has decreased dramatically. Picture: Paul Reid.