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Government should pay small retailers 75% of last year’s takings

Small retailers should be paid 75% of last year’s takings to help them through Christmas, says Mark Hart.

The latest lockdown announcements are going to hit small retailers hard just when they were starting to get their businesses back in shape. The Government should step in now and adopt the German model of guaranteeing small retailers’ incomes up to 75% of last year’s November takings.

By guaranteeing this level of income, it will give retailers the resources to be able to pay rent and other outgoings including salaries. This would enable them to also invest in an online presence. Otherwise many of them will not be around to trade at all in the new year.

Limiting this support to small retailers will focus resources on the independent sector. It means that consumers will not have to rely on the internet giants and ensure that the UK continues to have an innovative retail sector.

Thousands of small retailers have bought in stock for Christmas that they will now struggle to sell, so any form of support would be welcome.

Retailers now need to be innovative, set up websites if they can, operate a click and collect system, use social media where possible, even put messages in their shop windows ensuring that consumers know how to contact them and show what goods they have on offer.

The golden quarter up to Christmas is when retailers seek to generate the profits which often see them through the rest of the year. This year, the need to maximise income generation and reduce costs is more important than ever.

Retailers need to focus on understanding their customers’ needs and how their spending priorities will shift as a result of tighter restrictions. In addition, they need to maximise cash flow by negotiating flexible terms with their suppliers, looking at their distribution channels to ensure their products can reach the consumer as tighter lockdown restrictions bite.

But while retailers focus on how they are going to trade, the Government could also introduce a Christmas bonus of £100 to the unemployed and people on furlough for them to spend with small retailers.

A ‘Shop Out to Help Out scheme’ is needed to help families with their Christmas shopping, and would also give small retail outlets much needed support. We are looking at a very bleak Christmas unless the Government takes action to keep the consumer spending. These interventions are crucial in order for small retailers to continue to trade and protect jobs, considering that the furlough scheme still requires contributions to National Insurance and pension. They need to be able to accurately forecast their cash burn and their working capital needs when they are able to reopen.

The reintroduction of the furlough scheme is a clear sign that the Government sees this as the appropriate jobs support mechanism during lockdown and therefore they should announce now that the scheme will be in place throughout the winter as the threat of further closures of shops must be a real one.

Would you like to know more?

If you would like to discuss the above or how it may affect you, please get in touch with your usual Blick Rothenberg contact or Mark Hart, using the details to the right.

For any press queries, please contact David Barzilay whose details are to the right.

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