Small businesses may quit due to further pandemic restrictions, warns Scottish Wholesale Association

Further pandemic restrictions and a lack of alternate products could force small businesses to quit, Scottish Wholesale Association has warned, calling on the government to create a system of regional hubs to  dissipate supply chain issues. 

Raising his concerns at an evidence session of the Economy and Fair Work Committee in the Scottish Parliament, Colin Smith- chief executive of the Scottish Wholesale Association, argued that coronavirus restrictions, labour shortages and Brexit had exacerbated existing issues.

“The biggest concern we have is another lockdown… we lost a lot of money because of the amount of fresh stock that had been wasted and we are being forced to take volume that we can’t afford,” Smith stated.

“The producers are cutting back on the number of physical products they are making and streamlining the fastest sellers.”

Smith also pointed out that 98 per cent of wholesalers are small, family-run businesses, many of which are now facing serious cash flow problems.

“The biggest concern is we end up with a national supply chain – the 98 per cent of SMEs in Scotland are just going to say this is too tough, we are cut – and it will be the nationals that pick up that business.”

Smith explained that the sector had started training shop floor workers to drive lorries, helping to mitigate some of the truck driver disruption, but noted the sector was still 10 per cent short on drivers.

“Because there is a shortage of drivers, there is a streamlining process, there is a commercial decision those producers are making that only benefits the large wholesalers and national wholesalers, at the detriment of the smaller ones.”

Revealing that many of his organisation’s members are stockpiling goods in warehouses and are being forced to take out more storage space, with some stockpiling three times what they normally hold, Smith said that it is now putting “huge problems on the businesses cash flows”, on top of the debts from the pandemic.

Smith said his members were expecting the HGV driver shortage to iron itself out within 18 months, but argued supply chain problems are much deeper and need to be resolved, suggesting the government create a system of regional hubs.

The committee also heard from Dr John Lee, head of policy and public affairs at the Scottish Grocers Federation, who called for the Scottish Government to reintroduce business rates at a reduced poundage to help the recovery of businesses.