The assumption that two new Co-op stores in Sandwick and Scalloway will not threaten the long-term future of local stores should be questioned, according to the director of the economic development team at the Shetland Islands Council.
Tommy Coutts said if concerns about expansion plans emerge, there could be job losses in the local economy.
The cooperative plans to expand its Lerwick and Brae stores by building new stores at East Voe in Scalloway and Stove in Sandwick, but critics say they will have a significant impact on existing local retailers and the retail sector in fat.
The developer behind the plans said earlier this month that a retail impact assessment and economic statement showed the proposals “would not have a noticeable impact on vitality or the viability of Lerwick town center or on shops in rural / village areas, including Sandwick and Scalloway. ”.
Shetland Food and Drink, however, warned earlier this week of “a weakened local economy and poorer quality of life” from the cooperative’s expansion.
Writing on behalf of the council’s economic development department in response to the two plans, Coutts said it’s realistic to assume there will be benefits from both possible stores arriving in Sandwick and Scalloway.
This would include more choice for consumers, cost savings, less travel, and increased construction activity.
But he said the assumption that there would be no significant or long-term impact on local retailers should be challenged.
Coutts said in a response to planning requests that “the direct impact of displacement is an inevitable consequence.”
“Rural retailers operate with extremely tight margins and a limited customer base. Therefore, any significant business shift (the report estimates the cumulative ‘trade diversion’ of rural retailers to be £ 0.49million) should be considered significant, especially when it will lead to lengthy shifts. ultimately in customer behavior, ”he added.
He also believes that the assessments presented by the cooperative – that local stores sell 19% above average – paint an ‘unrealistic picture of rural retail in Shetlands’ due to the constraints of island life.
Coutts went on to say that the valuations do not take into account the higher operating costs in Shetlands, such as transport and energy.
“Rural retailers cannot operate with the economies of scale that supermarkets can, and are therefore likely to be challenged on prices as well as availability of goods and other considerations (eg hours of operation) “, he added.
“The assessment advances the purchase of goods from local producers as a net benefit to the Shetland economy. However, the current Shetland Co-op stores buy from relatively few local suppliers.
“If the proposed developments threaten the viability of existing rural retail operations, with the effect of reducing their purchasing power, this will impact the ability of local stores to buy from local suppliers and lead to a net reduction in trade for local producers and wholesalers.
“This could have the effect of threatening the viability of supplier businesses in addition to the impact on rural retailers.”
Coutts concludes that if the development “results in impacts on local retailers and suppliers as described above, the net employment impact can be expected to be less than overall, due to losses. potential jobs in other areas of the economy ”.
Property developer Seamount said building the two convenience storeys at East Voe, Scalloway, and Stove, Sandwick would represent an investment of around £ 2.4million.
When completed, approximately 20 full-time and part-time retail jobs would be created at each location.
The cooperative has always said they will stock local produce and improve the shopping experience in Shetlands, providing more choice in Scalloway and Sandwick.
The two town planning requests remain under study.
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