Why are small independent retailers being squeezed?

Independent retailers here are under such financial pressure that it is preventing growth and halting investment, a Belfast business owner has claimed. Retail director and shareholder at Retail Zoo Limited, Chris O’Reilly outlined to NR the significant costs retailers are now facing, with the rise in National Insurance contributions and rates only serving to stunt business growth.

Retailers, particularly independent retailers have witnessed an astronomical rise in their costs in the last few years. However, the increase in wages and National Insurance contributions introduced by the Labour government in the last year have put an unprecedented strain on businesses.

Coupled with decreasing footfall on our high streets and consumers continuing to be conscious of when, where and how they spend their money, retailers are battling hard to offer an increasing range of services and offerings as well as value and top customer service.

Indeed, retailers across the region have reported staggering increases in their weekly wage costs and are struggling to find ways to mitigate these rises without inevitably having to pass these onto the consumer.

Belfast retailer, Chris O’Reilly made the very difficult decision to close his Centra Ormeau Road store earlier this year, citing the decisions of government which he said have only punished independent retailers.

“Before the hikes kicked in, our National Insurance bill was £1250 per week. You amplify that to where it is now, pro rata, and our National Insurance bill is £2950 per week,” said Chris.

“This is something that is going to continue to bite – every time the wages go up, it puts up our National Insurance contribution because it’s a percentage metric. This will continue to grow every year, and I do not think that is necessarily something that everyone recognises.”

Accepting that every business has “spinning plates”, Chris said it was hard not to step back and “wonder where it’s all going”.

“Where we were on the Ormeau Road in Zone A, our rates were £350 per sq ft and we were told this was because the shop had windows and high footfall,” said Chris.

“However, I know larger retailers are paying £200 per sq ft and others in the city are paying less. I know there are multiple nuances inside the rating system, but why are they not looking at what the larger retailers are paying? Why are we squeezing small independent retailers?

“Our business has to find £150,000 extra for wages. It really is preventing the appetite of an investor,” added Chris.

“The strategy is not aligned and we are not on a growth strategy, no matter what the government is saying. We are getting levered at every wheel and turn. The retail dereliction in Northern Ireland is off the scale, the percentages are astronomical.”

Recently elected to be non-executive director of the National Federation of SubPostmasters (NFSP), Chris is a passionate advocate for the Post Office service here and as the majority of Post Offices are now based in a retail setting, there are also added pressures on retailers within this setting.

Earlier this year, a 10-point plan to revitalise the Post Office network here was published, calling for practical and tangible support for postmasters here. At a launch event at Stormont, Jim McCafferty of the NFSP revealed that SubPostmasters are being paid less now than they were in 2012.

He added that government has continually removed services which has led to a decade of decline, rendering many Post Offices unviable.

Chris also outlined to those present that a government green paper has already recognised there is a role for the Post Office and called on Northern Ireland’s MLAs to help revitalise that network here.

The Stormont event was hosted by MLAs Diane Forsythe and Matthew O’Toole. A drop-in centre was also hosted at a later date in Stormont which saw about 13 to 14 MLAs drop in, including Paula Bradshaw who described the session as a “useful opportunity to hear directly from Post Office representatives”.

In a social media post, Ms Bradshaw said it was “important that any changes to the network are carefully managed and that the needs of local communities remain at the forefront of decision-making”.

Chris said that MLA Justin McNulty had also reached out and hosted a meeting with him and the CEO of NFSP, with Chris welcoming Mr McNulty’s interest in the issues that were brought to the table.

“He listened keenly to what we had to say and saw the viability in some of the things we were asking for, such as rates exemption for the spaces Post Offices take up in a shared retail space,” said Chris.

“We also discussed the issue with the NI consumer and NI Postmasters being disadvantaged with no DPD courier services and the issues with Evri coverage in NI. We had asked if it was possibly for the Executive or someone from Stormont to contact these suppliers in the hope that political pressure could provide a solution.

“Unfortunately, his message was rather bleak in that regard but ultimately, it was good exposure for us to get to meet an MLA, present him with the document and articulate some of the concerns we, as postmasters, have in NI.”

Chris added that the NFSP and SubPostmasters want to continue the conversation and highlight the issues they are facing.

“The one area that is very much in place is the ask for the rates to be renewed, as that exercise is being conducted again.

“The rating situation has changed in GB and we are addressing the Finance Minister and telling him that we would like to be given a bit more grace and recognition for the social and economic benefits that we bring to the high street.

“We are also wanting to increase our services and increase footfall. For our customers, the biggest challenge here is that in Northern Ireland you have to have a paper copy of your insurance certificate in order to tax your vehicle. During covid it was okay for it to be digital, but then it returned to having to be a paper copy, but we were not given any reason why this is the case other than the DfI Minister has to sign it off.

“We are in a digital age and you can see the customer’s certificate on their phone, but we aren’t allowed to accept that. I cannot tell you the amount of times we have people coming in and giving off to us about this, it’s unbelievable. That is one small barrier to improving the customer’s journey and experience at the Post Office.”

READ THE FULL INTERVIEW WITH CHRIS O’REILLY IN THE JUNE-JULY ISSUE HERE