Why retailers like Asda may have to backpedal if Scotland votes Yes
Bosses at a number of prominent UK retailers, including Marks & Spencer, B&Q, Asda and the John Lewis Partnership have weighed in on the Scottish referendum taking place this Thursday.
All of them have warned of prices rising in an independent Scotland, due to the increased costs of cross-border trading, and thus have either explicitly or indirectly advised consumers to vote No.
There’s no doubt that a Yes vote would have an impact on the UK/Scottish retail sector. Currency and taxation uncertainty, import levies and new distribution and network agreements are all likely to hit the bottom line of already embattled retailers. Plus businesses naturally want as little political upheaval as possible, so it’s no wonder these brands have tried to influence public opinion on the benefits of staying together.
However, there is a question as to the role of business leaders in trying to influence the outcome. An independent Scotland is a matter of enormous emotional importance and this week’s vote is about convictions. It’s an issue that really matters to those involved and it’s anticipated that up to 80-85 per cent of the eligible voting public will take part.
There has already been a social media backlash against those retailers who have spoken out, and in the event of a Yes vote they may well have to back-pedal in a hurry. There will probably be a period of national pride in Scotland, akin to post-Olympics 2012, which will lead many to look askance at the doubters.
Retailers would have to embrace an even more patriotic Scotland, supporting local brands if they don’t want to be alienated. They would also have to change their approach and the mix of items they sell: let’s not forget that the number one soft drink in Scotland isn’t Coca-Cola, it’s Irn-Bru; and the number one lager isn’t Carling or Foster's, but Tennent’s.
There’s no doubt that UK retailers have a good track record for embracing local products, from bakery (eg the bap, the barm cake and the cobb) to ethnic ingredients, but sourcing new local brands could raise a different conundrum.
On the other hand, there is a question of which brands Scottish shoppers would turn to if they were to boycott British retailers. Farmfoods is currently the only major grocery retailer to be headquartered north of the border – but it would need to invest massively if it aimed to be a viable alternative.
Of course, discounters from Germany have shaken up the market and have already become widely trusted – and that may help local shoppers in the event of independence. Aldi, for example, already has 50 stores in Scotland and a range called The Best of Scotland with local suppliers.
Yet even in the event of a No vote there may still be fallout for those retailers who have spoken out publicly. There will still be a lot of Scots who will vote Yes to independence and for whom a No outcome will be a crushing disappointment. Those shoppers may blame the scaremongering and interference of these business leaders.
That all said, Scots, like most other modern consumers, are canny shoppers. I suspect they’ll continue to vote with their feet and shop where they perceive the best value.
It’s always tricky for brands to weigh in on political issues, especially those as highly charged and divisive as the upcoming referendum. It’s clear why Asda, M&S and the rest have weighed in, but it could come back to bite them no matter which way the final vote goes.
However, for retailers this goes beyond politics. It's material; it will affect them and their value. They have a responsibility to make their points on behalf of their shareholders and I'd be seriously questioning if they didn't have a public view.
Ian Humphris is joint managing director at LIFE