Responsible finance supports retail jobs
The wave of store closures has implications beyond employment, which the responsible finance sector can counter, through investing in the local economy and regenerating high streets in communities across the country.
It has been a difficult few months for retailers; there are now weekly announcements of store closures and high street brands going into administration. A common thread through all of these stories is the thousands of jobs lost, or at risk by the slow decline of the retail sector. In the first three months of 2018, over 21,000 jobs were affected. Reading the tea leaves of macro-economic pressures and consumer shopping preferences moving to online, this trend is likely to continue.
The retail sector is the largest industrial sector in the UK, employing 4.6 million people in 2016, 15.2% of the total workforce, which is what makes this gradual decline so concerning. Some of the jobs lost will be replaced by new and growing industries, but it is hard to hard to think of an industry with the capacity to absorb the employment share that retail represents. So how can we be proactive and protect the economic prosperity of those thousands of people whose jobs have or will be impacted by the physical contraction of the retail sector?
The responsible finance industry provides a solution on multiple fronts. The sector supports entrepreneurs and small businesses to access the finance they need to start up and grow. For many people in the retail sector, microentrepreneurship or social entrepreneurship may be an attractive option to apply their customer facing skills and experience managing a store branch, inventory and sales. Responsible finance providers offer finance and non-financial support to their customers, which helps small businesses develop a business plan and financial assumptions to launch a successful business.
Over the past 10 years, responsible finance providers have lent over £0.5 billion to almost 60,000 businesses, helping start up over 48,000. This created 76,500 jobs. The sector also invested over £1 billion into 5,200 social enterprises over this time, which helped launch over 450 new social enterprises, creating almost 5,000 jobs. Each year the jobs created as a result of investment from the responsible finance sector contributes between 1 and 5% to the UK’s overall jobs growth. This benefits local economies across the UK, reducing regional economic disparities. In 2017 75% of the sector’s small business lending was outside of London, and in particular 25% was in Yorkshire and the Humber, a region that does not see high levels of investment by the mainstream and alternative lenders.
An example of how responsible finance helps to create jobs is demonstrated by Nottingham-based business Alpkit, which designs, manufactures and sells outdoor gear and equipment. The firm began when four friends with a shared passion for exploring the Alps started making gear for themselves and for people they knew. They then progressed to selling directly to outdoor enthusiasts in 2004 as an online-only retailer. The firm’s turnover has increased significantly and its staff numbers have grown from 12 to 63 people after working with responsible finance provider Enterprise Loans East Midlands (First Enterprise). The business loan they secured allowed Alpkit to scale its manufacturing and open retail stores. In 2018, Alpkit took home the Citi Microentrepreneurship Award for Growth.
This impact can be scaled up significantly, particularly in the face of the shrinking retail sector. To do so, Responsible Finance is calling for:
- Dedicated funding for responsible finance providers to increase lending;
- Fit-for-purpose tax reliefs and guarantees to stimulate private investment into underserved markets; and
- Proportionate and appropriate regulation to increase fairness and transparency in the small business lending market.
These levers will create a thriving and sustainable responsible finance sector to provide access to opportunity for those facing jobs losses and unemployment in the retail sector. The wave of store closures has implications beyond employment, which the responsible finance sector can counter, through investing in the local economy and regenerating high streets in communities across the country.