independent retail report for wales · independent retail report. 2017. welcome from. mark dudden,...

INDEPENDENTRETAIL REPORTFOR WALES2017

CONTENTS

Welcome from Mark Dudden page 3

Wales President

Introduction from Paul Baxter CEO page 4

About the NFRN page 5

Independent Retail Sector Overview page 7

Retail Crime page 8Shop theftRobberyViolence and assaultUnder reportingIllicit trade

Business Rates page 15

Help the High Street page 16

UK Wide Challenges page 18Living wageDigital taxPayment services Monopolistic wholesalers

The NFRN’s six point plan for survival page 19

INDEPENDENT RETAIL REPORT 2017

Welcome from

Mark Dudden, District PresidentThe NFRN is keen to increase engagement with the Welsh Assembly as it takes on more responsibility for issues affecting independent retailers.

Independent retailers provide real value to their local community, whether this is supporting a local cause, giving young people their first job, providing a store to door news delivery service or being the gateway to payment services, post offices and more. We put the convenient in convenience stores.

Sadly, retail crime is considered as the norm throughout the UK, and Wales is no exception. Violent crime continues to rise and independent retailers feel vulnerable to armed robberies and raids.

Our members pride themselves on being responsible retailers, ensuring that age restricted products do not get into the hands of children. That is why we call on more to be done to combat the illicit trade market, with legitimate solutions rather than increased burdens such as the tobacco retailers register.

I encourage you, after reading this report, to contact your local NFRN member and meet your local independent retailers to discuss the issues that matter to them and how you can help. With your support we will be able to address the problems the independent retail sector faces.

Thank you.

Mark DuddenWales District President

“We put the convenient in convenience stores...”

Introduction from

Paul Baxter, CEOThe NFRN exists to provide help and practical support to ensure our thousands of members can grow sales, reduce costs and trade successfully. We encourage higher retail standards to help independent retailers understand, introduce and comply with latest legislation and we offer training to ensure our members can compete more effectively in today’s challenging environment. When things go wrong, we offer legal advice and pastoral care.

In this report we aim to highlight the issues affecting the independent retail sector in Wales and how the National Assembly for Wales can support NFRN members.

Retail crime is of key concern to our members, with hardly a day going by when a shop owner or assistant does not become a victim. The NFRN cares for the welfare of our members and we are deeply concerned about police response times and the lack of resolution to escalating crime levels.

Within our Independent Retail Report, we reveal how road works, insufficient parking, hikes to business rates and the issues regarding competition and a fair market all impact on the businesses of independent retailers.

There are many issues that threaten the livelihood of our members. Please help us overcome them and protect the variety, vibrancy and value of independent retailers in Wales.

Paul BaxterChief Executive of the NFRN

2017

“Protect the variety, vibrancy and value of independent retailers in Wales...”

About the NFRN:The Federation of Independent Retailers

While it can trace its history back to the 1840s it was in Leicester in July 1919 that the first unified conference of the NFRN was held.

One hundred years later, and in today’s highly competitive market, membership of the NFRN still gives independent retailers a trading advantage as our 15,000 members show. From access to professional legal and financial services through our NFRN Legal and NFRN Legal Plus services, commercial support and membership of our own buying group, to a campaigning team which fights for retailers in the corridors of power, the NFRN provides members with the services, protection and support they need.

A team of national officials, led by the National President, are elected by the NFRN’s Annual Conference, which sits at the top of a democratic membership structure that reaches from local branches and districts to the National Executive Committee and National Council.

While the NFRN’s policy is set by members at Annual Conference, its implementation is the responsibility of Chief Executive Paul Baxter.

An experienced field force is one of the NFRN’s great strengths. Retail Development Managers and Retail Support Officers assist members in their place of business, keeping them up to date with regulatory changes, the latest offers and helping to make the most of the benefits the NFRN offers.

With its member focused approach and one hundred years of retail experience, no organisation does as much as the NFRN to help today’s independent retailer.


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What the NFRN does for retailers

Protects independent retailers’ businesses from legal costs through a 24/7 legal advice and claims process

Our highly trained professionals offer retailers practical solutions for their business concerns

A wealth of information and guidance to help with the development of core business skills and organisation to deliver higher retailer excellence and greater profitability

Financial savings support for themselves, employees and businesses

Offers a comprehensive package of products to protect businesses, homes and rental properties tailored to each member’s needs

Confidential support, direction and solutions to financial pressures


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Wales Independent Retail Sector OverviewFor most towns across Wales, independent retailers dominate the retail landscape and provide enormous benefits to the community they serve.

Source: Wales Institute of Economic and Social Research Data and Methods (WISERD) and Local Data Company report on Welsh Towns and Cities in 2016

Town centres in Wales continue to have the highest vacancy rate, with 14.6% of retail premises in Welsh town centres currently vacant, down from 15.1% in 2015. Issues which deter independent retailers from opening their business in town centres are largely down to parking, accessibility and business rates.

Gorseinon continues to have the lowest vacancy rate and Milford Haven continues to have the highest vacancy rate. There are currently 14 Welsh towns and cities with a persistent vacancy rate above 10%.

NFRN represents circa 1,000 independent retailers across Wales, with 24% of post offices in Wales in membership. Hundreds of Post Offices in Wales have modernised and moved into new business models, many with independent retailers, as part of the ‘Network Transformation Project’.

Whilst mail and parcel delivery services are still an important function of the Post Office network’s future, non-mail services are on the rise. With the decline in the number of bank branches across Wales, the Post Office is becoming increasingly more important to the local community with nearly 30 per cent of Post Office Customers use the service for banking service and around 20% use the network for pension, benefits, DVLA and bill payments.

Percentage of independents out of total retail premises

Conwy

Barry West

Pwllheli

Gorseinon

Maindy

Llanidloes

Welshpool

Porth

Llandeilo

CowbridgeRoad East

Top 10 towns by the percentage of independents in 2016

0.0 20.0

87.5

85.4

75.4

74.2

74.2

71.8

71.7

71.6

70.7

69.9

40.0 60.0 80.0 100.0

2017

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Retail CrimeViolent crime continues to increase and retail staff are on the frontline. British Retail Consortium statistics show that one shop worker is attacked or threatened every minute of the shopping day. Female workers say they feel particularly vulnerable and the stress this can cause can itself be a problem. The latest British Retail Consortium survey revealed that the cost of crime to UK retailers reached a record £660million, up 7.6%. Shop theft remains the highest cost to retailers, but other contributors to retail crime include robbery, violence, vandalism and fraud.

Shop TheftShop Theft remains the most common type of retail crime, accounting for 75% of the reported retail crime incidents and cost the UK retail sector £438 million last year.

Cost of Shop Theft

The Home Office’s Crimes Against Businesses – Victimisation Survey 2015 revealed that only 34% of shop theft is reported to the police, meaning the reality is that shop theft is likely to be much higher than currently recorded.

Independent retailers feel that they are left to pick up the tab of shop theft, with little or no prosecution due to it becoming ‘common practice’. Larger retailers, such as supermarket chains, can absorb the costs associated with shop theft and retail crime in comparison to independent retailers.

Retailers across Wales continue to invest heavily in loss prevention measures, including CCTV, panic alarms, and shutters and keeping high value items behind counters. Independent retailers cannot afford the physical security that larger retailers can afford; therefore, retailers need to trust in their local police for reliable response times.

£438 Million PER YEAR

£36.5 Million PER MONTH

£9.1 Million PER WEEK

£1.3 Million PER DAY

£54,315 PER HOUR

£905.25 PER MINUTE

£15 EVERY SECOND

COST TIMEBritish Retail ConsortiumCrime Survey 2016


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RobberyThe number of robberies per 100 stores has increased to 6%. This is a worrying rise for retailers in what is inherently a violent crime which does not only have a financial loss, but has often resulted in loss in life and severe injuries. Several NFRN members in recent months across Wales have been seriously injured from violent robberies.

The average cost per incident varies between £700-£1500, not including the staff and business loss due to injury, shock and unwillingness to work. Small and micro retailers are seen as ‘easy targets’ as they are often open early until late; however recent robberies in North Wales, Dyfed Powys and South Wales have seen robberies occur in the middle of the day.

JANUARY 2017 CWMBRAN

Two robbers targeted a newsagents and post office in Cwmbran and

made off with thousands of pounds. The incident occurred in the middle

of the day by organised criminals who targeted the small

retailer.

FEBRUARY 2017HOLYWELL

A Holywell, North Wales, newsagent was held up at knifepoint two weeks

after opening the shop. Mrs Craig said she is now “very shaken up

and nervous, every time someone comes into the shop I’m

on edge.”

MARCH 2017LLANDUDNO

Young female shop worker in Llandudno was left traumatised after

being a victim of armed robbery in Upper Mostyn Street. The woman

was working alone and approached by a man in the middle of the day, who made off with a considerable

amount of cash, tobacco and cigarettes.

2017

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Violence and AbuseRetail staff continue to suffer an unprecedented level of violence and abuse in their workplace, which for a large proportion of NFRN members, is also their home. The Union of Shop, Distributive and Allied Workers (USDAW) revealed in their ‘Freedom From Fear’ campaign in 2014 that on average 241 retail staff were victims of violence and abuse every single day. In an industry of three million workers across the UK and as one of Wales’ biggest employment sectors, retailers need to have the confidence that they will be protected in their place of work.

NFRN members pride themselves on being responsible retailers and operate proof of age schemes such as ‘Challenge 21’ and ‘Challenge 25’, as well as carrying out a ‘No I.D, No Sale’ policy. However, many incidents of violence and abuse arise when shop workers request proof of I.D on age restricted products such as alcohol, tobacco and lottery products.

The British Retail Consortium reported that violence and assaults have increased by 40% in comparison to the previous year.

CASE STUDY:NFRN, USDAW AND UNDERAGE SALES LTD SURVEY

The NFRN partnered with the Union of Shop and Distribute Allied Workers and Underage Sales in carrying out an extensive survey on retailers experience with violence and abuse.

Only 26% of retailers who had experienced verbal, physical abuse or attack reported the incidents to the police. Of those, 57% either did not receive a response from the police, or were unsatisfied with the response they were given.

Many incidents of violence arise when retailers are carrying out what they are legally obliged to do, asking for proof of ID when selling age restricted products. As a result, experiences of verbal and physical abuse and attach have made UK retailers almost 30% less confident in asking for ID when selling these products.

241RETAIL STAFFare assaulted every single day

Violence and assaults have increased 40%

Mr Haq was viciously attacked during a robbery on his Queensferry store in December 2016. Mr Haq was stabbedin the neck and hand, as well as horrifically beaten by his attackers. Staff refused to go back to the store due to being frightened by the risk of retail crime, which resulted in Mr Haq closing down his store, with the community cut off from a convenience retailer.

CASE STUDY IMITIAZ HAQ (QUEENSFERRY)

! NFRN Calls for: The Welsh Government to work with the NFRN and police forces across Wales in addressing the issue of violence and abuse and work for a solution to the problem.

Under Reporting There is a serious lack of reporting of retail crime in Wales and across the United Kingdom. Whilst the NFRN actively encourages members to report all instances of retail crime to police, there is a noticeable decline in police reporting which is mainly due to retailers not believing that the police will adequately resolve their reported crime. Prosecution and conviction rates for shop theft cases are at an all time low. Some areas of the UK have as little as a 5% conviction rate for shop theft.

Due to prosecution rates being so low, retailers often don’t report incidents to the police as they feel that nothing will be achieved, resulting in their business picking up the tab for retail crime. A recent NFRN Retail Crime Survey revealed that 33% of retailers said that the police were unable to adequately prosecute shoplifters. Independent retailers and the NFRN believe that no crime should go unpunished and retailers should not be left to face the costs of crime.

Home Office SurveyThe Home Office Crimes Against Businesses – Victimisation Survey 2015 revealed a shockingly low number of shop theft cases were reported to the police.

2014 2015 Change Burglary 95% 88% -7

Theft from customers 44% 34% -10

Vandalism 35% 31% -4

Assaults and threats 35% 42% +7

NFRN Retail Crime Survey 2015When NFRN members were asked why they did not report shop theft to the police, the responses were:


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25%SAID THE POLICE

“DID NOTRESPOND”

34%SAID THE

PROCESS TOOK“TOO MUCH

TIME”

33%FELT THAT THE POLICE

WERE “UNABLE TO ADEQUATELY

PROSECUTE SHOPLIFTERS”

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Police Response For better co-operation between the business community and the police, businesses need to be able to rely on an adequate police response when called. The NFRN is concerned that police in Wales may be prioritising responses to supermarkets rather than a balanced approach in responding to retail crime by risk. Supermarkets have their own security and systems in place when responding to retail crime in their stores. Independent retailers do not have the same level of security as supermarkets, although independent retailers are continuing to invest heavily in loss prevention measures, including CCTV, mirrors, panic alarms, and shutters, as well as placing high value items in a secure location. They cannot, however, afford physical security.

Responses received from several police forces in Wales and around the UK reveal that a higher percentage of incidents occurring in supermarkets or hypermarkets are dealt with by an ‘immediate response’ or a ‘prompt response’. Incidents occurring at independent retailers, for example newsagents, off-licences and convenience stores, tend to receive more ‘prompt responses’ followed by ‘scheduled appointment visits’ following a retail crime incident.

Code 0 Code 1 Code 2 Code 3 / 5 Supermarket 33% 55% 11% 1%

Independent Retailers 27% 41% 31% 1%

-6% -14% +20% -

Source: Freedom of Information response from North Wales Police for retail crime responses in the twelve months from December 14-15.

Code 0 Code 1 Code 2 Code 3 Code 5Immediate Prompt Managed / Advice HelpdeskResponse Response Scheduled

The British Retail Consortium crime survey 2016 found that a majority (56%) of retailers say that they believe police operate ‘poorly’ or ‘very poorly’ when dealing with retail crime. 56%

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SOUTH WALESEFFICIENCYGOODEFFECTIVENESSGOOD LEGITIMACYGOOD

GWENTEFFICIENCYGOODEFFECTIVENESSGOODLEGITIMACYGOOD

NORTH WALESEFFICIENCYGOODEFFECTIVENESSGOOD LEGITIMACYREQUIRES IMPROVEMENT

DYFED POWYSEFFICIENCYREQUIRES IMPROVEMENTEFFECTIVENESSREQUIRES IMPROVEMENT LEGITIMACYREQUIRES IMPROVEMENT

Source – HMIC Report 2016

Date South Wales Gwent North Wales Dyfed PowysJanuary 613 240 264 121February 729 308 286 137March 755 297 326 149April 757 332 368 115May 688 291 355 118June 708 332 295 114July 716 298 319 138August 781 347 368 105September 816 342 355 132October 767 277 299 135November 819 331 293 154December 816 334 306 122

8,965 3,729 3,834 1,540Comparison 5.45% 21.70% -2.39% 3.14%with 2015 Increase Increase Decrease Increase

Number of Shop Theft Incidents Reported 2016

2017

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Illicit TradeThe illicit tobacco market includes counterfeit and smuggled products. The market contributes significant losses to legitimate retailers across the United Kingdom, as well as substantial losses to the Exchequer.

The tobacco tax gap is made up of the illicit markets in cigarettes and hand-rolling tobacco. It was estimated in 2015/16 that this market cost the Exchequer excess of £2.4 billion, a 33% increase on the previous year, with £1.9 billion lost in tobacco duties and £0.5 billion lost in VAT. The Exchequer is missing out on an overwhelming £15 billion over the last few years along due to the illicit tobacco market.

NFRN members and legitimate tobacco retailers are concerned by the lack of prosecution and enforcement regarding illicit tobacco. Some parts of England and Wales have seen illicit tobacco consumption up to as much as 20%.

The health concerns of illicit tobacco are enormous, with the World Health Organisation stating that if illicit tobacco was eliminated today, it would save 32,000 lives every year. The biggest health concern is with regards to children. Children have direct access to the illicit tobacco market, with more than fifty percent of children being offered illicit tobacco in some areas.

Tobacco Retailers Register The NFRN has given evidence to the Welsh Assembly’s Health and Social Care Committee on the proposal of a tobacco retailer’s register in Wales. The NFRN disagrees with suggestions that a register would reduce the level of illicit tobacco and in return adds a further burden on legitimate retailers in Wales.

Any such register should be free to enrol with no additional fees, similar to systems in Scotland and Northern Ireland.

! NFRN Calls for: More to be done to counter the illicit tobacco market, including educating tobacco consumers of the dangers the counterfeit produce contains and the damage it has on the economy and legitimate retailers.

ILLICIT TOBACCO CONSUMPTION

UP TO AS MUCH AS

20%


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Business RatesFollowing the biggest rate revaluation in history, hundreds of independent retailers across Wales are facing substantial rises in their business rates bill. The NFRN believes that small business rate relief has been crucial in helping independent retailers remain in business and continuing to provide services to their local communities.

Following the 2017 Spring Budget, the NFRN welcomed additional funding for local authorities to allocate discretionary relief to businesses affected by the rates revaluations and coming out of the current small business relief.

Whilst the NFRN welcomes the Welsh Government’s pledge to fully fund a £10million High Street rates relief scheme, more needs to be done to protect the value of independent retailers to Welsh High Streets.

Cash-less communitiesThe NFRN is concerned that free ATMs attached to shops could be coming to an end. In 2013, the Valuation office Agency ruled that cash machines that are built into the front of shops should have a separate rates bill than the business it is a part of.

As a result, retailers are hit with a substantial rates bill which is separate to the rateable value of their business which makes them think twice before installing a hole-in-wall cash machine in front of their premises.

With banks disappearing across the UK - with more than 2,000 branches closing in the last two years – this adds pressure on communities and local businesses which depend on the ability to make cash withdrawals. If retailers do not provide this service, creating cash-less community will have an impact on the elderly and poorest in society.

Help the High StreetOne of the biggest challenges for small businesses located in town centres and on the High Street is customer accessibility. When a business is hampered by lack of parking, or lengthy road works, it can seriously impact a small retailer’s business and can even lead them to close altogether.

ParkingSmall independent retailers suffer greatly on the issue of parking, especially in comparison with supermarkets and growing out of town developments. With parking supply already an issue in many town and city centres, small businesses are feeling the impact.

The cost of parking is driving away custom from the high street and from independent retailers. To park centrally in town centres members of the public across the country can expect to pay more than £10 for a few hours and very limited spaces for short term parking. This cost drives customers to seek free and easy-access parking, mainly out of town business parks or supermarkets instead, or encourages customers to shop online which severely damages the traditional high street.

Road Works Must PayThe NFRN calls for a change in policy to ensure local businesses directly impacted by road or utility maintenance get a proportionate business rate refund or are adequately compensated by utilities and County Councils, depending on the nature of the works.

Throughout the UK, road works are missing their completion targets which have a significant impact on many small businesses but, in particular, the retail industry. Independent retailers know their customers as they are an integral part of their local community. When a customer’s route to their convenience store has been impaired due to road works, they will go elsewhere; independent retailers can report a decline in sales by as much as 50% during road work periods.

With escalating business costs, the last thing retailers need is the access to their shop to be severely hampered, with no route to their business, thus cutting off trade and deliveries. Small businesses have to jump through hoops to get the compensation they are rightly entitled to.

2017

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NFRN Calls for: The Welsh Assembly and local authorities to access the current parking situation in town centres and cities across Wales and to work together to provide more competitive parking facilities and more affordable spaces on or near high streets and town centres.

!


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! NFRN Calls for: A simple, transparent process for businesses to claim compensation and business rate reduction for road works and utility maintenance that has affected them.

2017

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UK Wide ChallengesLiving Wage and Payroll Whilst the NFRN is sympathetic to calls to increase the National Living Wage and National Minimum Wage, our members cannot easily absorb this increased cost, which has resulted in a hindrance on their business growth.

Following an NFRN Living Wage survey when retailers were asked what measures they will have to take following increases to the living wage, 74% of independent retailers said they would have to reduce staff working hours, 44% said they would reduce staff numbers, 90% said the shop owner would work extra hours themselves, and 21% said they would reduce staff opening hours. These changes significantly impact consumers and local communities, with 69% of respondents saying they have had to increase stock prices to pay for staff salaries.

Digital Tax HMRC has set out to make tax digital for all businesses. The NFRN welcomed the Chancellor’s announcement at the spring Budget; businesses that are below the £83,000 VAT threshold will have an additional year to prepare for digital tax. However, there are still concerns from retailers regarding quarterly reporting, quarterly stock taking, the software costs as well as significant increases to small and micro businesses’ accountancy fees.

Payment Services Local authorities have employed the services of retailers to collect council tax but have not considered the cost on retailers who provide this service, including banking costs and charges. The provision of services, such as paying council bills, utility bills, TV licences requires availability of services which independent retailers have provided for many years. However, the current conditions attributed to this service have meant that independent retailers find it not sustainable.

Monopolistic Wholesalers – Newspapers and magazines are a significant footfall driver for independent retailers. There have been substantial changes in wholesale distribution market over a number of years and unfortunately for retailers, these changes have made life considerably harder and far less profitable.

74%

44%

90%

21%

If you had to take one of the following measures because of the increases to the National Minimum Wage and Living Wage?

Work extra hours

Reduce staff numbers

Reduce staff working hours

Reduce opening hours

Percentage of Respondents

These increases, as well as the introduction of auto enrolment pensions, add further burdens and costs for independent retailers.

! NFRN Calls for: The Government to recognise the value of this service provided by independent retailers for their local community and for the Government to support retailers to offset the costs of providing this service


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The NFRN’s six point plan to ensure a strong future for independent retailers in Wales

For the Welsh Government to work with the NFRN and police forces across Wales in addressing the issue of violence and abuse and work for a solution to the problem.

Greater action to counter the illicit tobacco market, including educating tobacco consumers of the dangers the counterfeit produce contains and the damage it has on the economy and legitimate retailers.

An assessment by the Welsh Assembly and local authorities of parking in town centres and cities across Wales, followed by concerted efforts to provide more competitive parking facilities and more affordable spaces on or near high streets and town centres.

A simple, transparent process for businesses to claim compensation and business rate reduction for road works and utility maintenance that has affected them.

A Government review of the impact that the Living Wage and auto-enrolment has on small and micro-businesses and an assessment of the level of increases scheduled.

Recognition of the burdensome costs retailers face for offering payment services in their shop and greater support to offset these

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If you have any queries, to arrange a meeting or to visit your local independent retailer, please contact the NFRN Public Affairs Team below:

NFRNYeoman HouseSekforde StreetLondonEC1R 0HF

Tel: 020 7253 4225 Email: [email protected]

independent retail report for wales · independent retail report. 2017. welcome from. mark dudden,...

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