Co-op Group’s Paul Gerrard warns of economic threat to retail sector

‘The pressures on retail are huge’, says the Group’s campaigns director, pointing to rising energy prices and business rates

The campaigns and public affairs director of the Co-op Group painted a stark picture of the pressures facing the retail sector at the recent Co-op Party Conference.

Paul Gerrard said “bricks and mortar retail is a foundational part of communities” but is facing enormous pressures from rising energy bills and the cost of living crisis.

“If you see empty stores on the high streets, you see a community that’s struggling,” he told a fringe session on high street regeneration. “Last year 17,000 shops closed and 7,000 opened. You can do the maths. Those foundational parts of our communities are under threat, be under no illusion.”

This is a serious problem, he added: he said: store-based retail employs 10% of the population and demonstrated its importance for community cohesion and support during the pandemic; individual businesses have large footprints – for instance the Group has 3,500 units and offers wholesale services to about 5,000 stores run by the independent retail co-ops.

Related: Report from day one of the Co-op Party conference

“The pressures on retail are huge,” he warned. “We’ve all felt the energy prices. They are hitting stores hugely. Food stores are hugely resource intensive – they open from seven till 10, they’ve got fridges, they’ve got freezers .. energy is now our second biggest cost in stores, after our Co-op colleagues.”

Business rates are also a huge burden, he said. “The tax receipts from business rates have gone up by 210% since 1990. Inflation in that period would have taken it up 75%. More and more is being squeezed out of bricks and mortar businesses. In April, unless government do something different, rates bills for bricks and mortar retailers will go up 20%. Rates are probably the single biggest reason why businesses don’t invest in their shops in high streets.”

Related: Report from day two of the conference

Added to this, stores are in competition with online businesses who don’t face such costs. Gerrard said big business like the Group could absorb such pressures more easily than smaller ventures who will find it “very, very difficult”.

“The rate system is broken,” he said. “The commercials as well as the domestic energy market is broken, and unless we address that you will see more shops close, you will see more empty stores and high streets, and that’s an unhealthy community where that happens.”

Community businesses also need a stronger transport infrastructure to help them operate, he added, and warned that the economic situation will continue to affect prices.

“The amount the amount of pressure being put on food prices isn’t going to go away. It’s going get worse in the coming months because things are feeding through.”