Hold retail back and hold the recovery back

As the politicians become fixated on the party conference season, let’s hope they caught at least a glimpse of London Fashion Week.

Behind the glamour of the catwalk shows and the parties is an industry which, directly or indirectly, contributes £37bn to the UK economy.

Few people in power recognise, however, the contribution fashion - or retail as a whole for that matter - makes to UK plc. But at a time when many more traditional sectors of the economy are struggling, and many public servants find their jobs under threat, the coalition can’t afford to ignore the vital part retail plays in the economy.

Retail has shown its willingness to play its part in helping the country get back on its feet. The 2.5 percentage point rise in VAT won’t be easy for the stores sector, but there has been no drama, and senior retailers have acknowledged that it forms part of a package of essential medicine to get the public finances back in order.

But the Government needs to play its part, and its side of the deal should be to avoid pushing more cost and bureaucracy onto retailers. The BRC highlighted this week that retailers face rises of up to 22% in business rates, largely because of a quirk in timing that means bills will go up in line with this month’s RPI inflation rate next April. That’s simply not fair on retailers.

The BRC does a fine job of putting the case for retail, and the new Government has shown signs that it is listening to retail’s top brass. The UK’s retailers don’t want any special treatment or favours, just a level playing field and the freedom to get on with their jobs free of bureaucracy. Do that, and retail will more than do its bit to help the country on its road to recovery.

Realism is on the cards

Retailers have also faced rising costs when it comes to card transactions. When people spend more on their cards, everyone benefits, so a healthy relationship between retail and the payments industry is vital.

But the trend towards expecting retailers to fund ever more generous cardholder benefits by paying higher fees on so-called ‘premium’ cards isn’t sustainable. The payments world needs the support of retailers if initiatives like contactless payment are to take off, and to get that support, the expectation that interchange fees can keep on rising has to change.