The latest Retail Sales figures for the UK show that in the 3 months up to June 2018 the quantity bought was up by 2.1%.  Now why this might appear to be good news a closer look at the figures and what is happening including in Orkney reveals a more concerning picture.

The largest increase is in food sales. Mainly this is due to a rise in food prices and people choosing to spend their money on that instead of on other items.

Worryingly taking food stores out of the equation shows a decline in footfall for non- food shops. We can see this in Kirkwall.

This is the main shopping thoroughfare in Orkney’s largest town, Kirkwall, where the boom in tourism is no protection for local businesses. These were well established businesses providing local residents with products which are mainly of no interest to tourists.

Those that are not empty are up for sale and some of these cater for visitors as well as locals.

So what is going on?

The Retail Sales figures also show that online sales are continuing to remain strong.

“Online sales as a total of all retailing remained unchanged at 18.0%; online spending in clothing and footwear stores continued to achieve new record proportions of online retailing, for the fourth consecutive month, at 17.5%.” Office of National Statistics.

As there are fewer non-food outlets in Orkney online sales will continue to increase for the islands as trying to buy local becomes more difficult.

Limited increases in public sector wages and large numbers on zero hours contracts means that Orkney has a low wage economy. Prices, however, have continued to rise and with the UK set to leave the EU on March 29th 2019 the UK Government has conceded that there will be food shortages. Consumers are understandably spending on food rather than on buying household goods or clothing.

Contributions to year-on-year growth in the quantity bought and amount spent in the four main retail sectors, seasonally adjusted

Looking at the graph shows you the difference between the quantity bought and the amount spent which is an indicator of price increases.

Some businesses in Orkney are doing well. Big tourist hot spots like Skara Brae visitor centre run by Historic Environment Scotland benefits greatly from the rise in cruise ship tourism because it has space for several tour buses and is a World Heritage site.

The new centre at Sheila Fleet’s Jewellery, also extremely popular with visitors, is another success.

Orkney’s distilling and brewing industries are  a big hit with visitors. Less accessible to the large tour buses they attract smaller groups and individual tourists.

Orkney’s Retail Future

The uncertainty of Brexit has left a dark cloud over what will happen for the future of many retail businesses in Orkney as the UK Government has pledged to end freedom of movement which made it so easy for our European visitors and workers to come to the islands.

The convenience of online shopping will continue to be strong as consumers can select from a wide range of products which they would struggle to find locally.

Your Kirkwall seeks to regenerate the town centre with what some might call the gentrification of areas like the shore front which it is hoped will make it more appealing to visitors. Places where you can sit outside and enjoy Orkney’s excellent food and drink.

The concern , however, is that Orkney becomes more and more reliant on the tourism industry to sustain many businesses. Although attempts have been made to lengthen the tourist season many places either close or restrict their opening times between October and April. This in its turn affects the workers in those businesses who can only expect to find seasonal posts.

This is not a problem confined to Orkney. What makes it more concerning for the islands is that   our other main industries agriculture and fishing will be seriously affected by Brexit  with the loss of the single market and the introduction of tariffs on our produce. Farm subsidies are being reviewed and many of our small farms will not be able to survive if these are removed. There will be a detrimental  knock on effect to other businesses in Orkney which support agriculture and fishing.

For the economy of Orkney to thrive it cannot be reliant solely on the tourism industry and being the choice destination for cruise ships. What happens over the next few months as the UK prepares to leave the EU will be a pivotal moment for the future economy of the islands.

Reporter: Fiona Grahame