Why Scotland Desperately Needs An Institute of Ecommerce

 When it comes to dismissive putdowns of the British, our friends in continental Europe have years of experience. “A nation of shopkeepers” was - allegedly - Napoleon’s contemptuous epithet for Britain. But these days anyone attempting to escape Brexit with a little light retail therapy is in for a disappointment. The British high street appears to have met its Waterloo.

As a city reporter for The Times in London in the mid-1980s, I covered the retail revolution when it was at its height. High street giants such as Marks & Spencer were expanding overseas with the enthusiasm of 19th century colonialists.

Dispatched to Boulevard Haussmann in Paris where M&S had set up shop, I reported back on the French obsession with “le sandwich” and their new-found taste for marmalade and sensible knitwear. British stores at the time were synonymous with quality.

Never the jazziest fashion-plates in Europe, we were showing le monde how to shop. We invented niche retailing. Anita Roddick, founder of Body Shop, Sophie Mirman, founder of Sock Shop and Laura Ashley were the darlings of the city.

Nowadays, it is European retailers, such as Sweden’s H&M - which owns Cos and & Other Stories - and Spanish groups such as Mango and Inditex, which owns Zara, Pull and Bear, Bershka, Uterque and Massimo Dutti, who are attracting British customers.

This month's figures from the Scottish Retail Monitor made grim reading. Scottish retailers experienced their “worst real-terms December sales figures in 20 years”. 2019 is not expected to be any better. The political uncertainty is taking its toll, but high street chains have only themselves to blame.

They have often treated their customers with disdain and failed to invest in their staff, while bosses, such as Philip Green, have creamed off ridiculous pay packets. But mostly they have been stupidly complacent about technology.

As a result, most high street stores look the same as they did ten years ago. The customer is met with rows of crushed and dishevelled stock crammed into every available space with little regard to sizing or aesthetics. Owners of struggling local stores, which rely on the big retailers to attract footfall, have every right to be furious.

A survey published last week revealed that two-fifths of shoppers would not care if the conventional high street disappeared and a third think it will be gone within five years. Just one in six believes it has a long terms future.

High street decline is not the whole story, of course. Online shopping only accounts for around 20% of all retail sales but it is growing exponentially. According to the Office of National Statistics, UK trade via ecommerce now accounts for ￡560bn annually and is growing at a rate of over 20% a year.

According to the Scottish government, ecommerce sales in Scotland are ￡26.4bn but it has no idea how much of that accrues from Scottish businesses. While Scots are just as likely to shop online as their English counterparts, most of the money they spend is flowing south of the border.

According to industry expert Dr Peter Mowforth, who is lobbying for a new Institute of Ecommerce in Scotland, it would be hard to attribute more than ￡2bn of sales to Scottish ecommerce companies.

“The lack of supply-side activity in ecommerce is now one of the major factors in Scotland’s relatively poor performance compared to the rest of the UK,” he says.

Take whisky, one of Scotland’s top exports. 100% of Scotch whisky is manufactured in Scotland and it accounts for 20% of all UK food and drink exports. But on the Chinese sourcing platform Alibaba - which has a turnover bigger than the GDP of Scotland - China, Germany, Japan, Thailand, Taiwan and UAE all rank higher than Scotland for sales of Scotland’s national drink. That is something to ponder over a glass of malt on Burns night.

Ecommerce represents an incredible opportunity for the Scottish economy and used in conjunction with physical shops – the bricks and clicks model – it could revitalise Scotland’s high streets. 50% of shoppers who Google a physical store, visit it within 48 hours.

But while millions of pounds of taxpayers’ money is sunk into Prestwick Airport and failing manufacturing companies, the investment in ecommerce in Scotland is non-existent.

The average salary for an ecommerce job in the UK is ￡43.5k, almost double the average wage, yet there is no Scottish university or college course specifically training people to work in the sector. There is no national body, no online resource, no annual event and practically no jobs in Scotland. Search for ecommerce on the Skills Development Scotland website and nothing comes up.

Scotland desperately needs an Institute of Ecommerce, where online companies can learn from practitioner experts and from each other: a physical and virtual hub which would be able to keep up with best practice and disseminate information and new ideas in a timely fashion.

Mowforth, who has worked tirelessly to make the Institute of Ecommerce a reality, says nobody can name the top 20 Scottish-based ecommerce companies, let alone compile any meaningful statistics. Yet ecommerce, which is so much more than simply online shopping, scores highly in terms of productivity and cash generation.

Barriers to entry are extremely low. It is an ideal solution for women who want to work flexibly around family commitments. You don’t even need a website. I am reliably informed that there are a dozen women in Glasgow area alone who are turning over ￡1m on eBay.

For rural businesses, ecommerce represents a significant source of revenue. Just ask Lynn Mann of Supernature Oils, whose ecommerce business started as a side-line to their Gorebridge Farm and is now an award-winning exporter.

The UK is the third biggest country in the world in terms of ecommerce turnover, after China and the US and it is bigger than France and Germany combined. In terms of turnover per head of population the UK is number one. It could turbo-charge the Scottish economy, but official interest in non-existent.

Even Napoleon would see the opportunity.

A version of this article first appeared in The Sunday Times on January 20 2019

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