Scottish Retail Sales Monitor
Humdrum Start to Golden Quarter for Scots
David Lonsdale, Director, Scottish Retail Consortium:
Retail sales slipped backwards in real terms in October as the rise in sales was outweighed by ever increasing inflation. Despite being the first month of the golden trading quarter, retailers will be disappointed not to have seen any surge in sales either for Halloween or early Christmas-related trading.
Food volumes continue to fall, indicative that customers carry on having to pay more for fewer items. That is having a knock-on effect on more discretionary retail spending, with the few signs of life being purchases of energy saving items such as air fryers for cooking, heated clothing airers and blankets. Clothing sales in particular were poor, turning in the weakest performance since February, with customers failing to refresh autumn wardrobes. Even with the soccer World Cup just around the corner there was little sign customers were getting ready, with no discernible uplift in television sales.
Weak trading is a huge concern for retailers who have suffered two successive poor Christmases. With costs skyrocketing the pressure is building on retailers to deliver a good performance. However, the Scottish and UK governments need to urgently assess the costs they are adding to businesses and see where they could lighten the burden. Next month’s Scottish Budget provides a clear opportunity to do so through forestalling any inflation-matching uplift in the business rate.
Paul Martin, Partner, UK Head of Retail, KPMG:
Despite the price of goods being higher than 2021, retail sales during October slowed to 6.3% growth in value year on year in Scotland. Unfortunately, this value increase is driven by inflationary pressures and doesn’t give the full picture of sales volumes.
The bottom line is that consumers are buying fewer products per shop, with overall volumes of both food and non-food in decline. Sales across almost every category both online and in store fell year on year as consumers adjust to shrinking household incomes.
Retailers will be hedging their bets on upcoming events such as the World Cup and Black Friday to boost sales during the crucial golden quarter. Given the economic headwinds, it is unlikely that the usual festive boost will be enough to counteract the ongoing issues that retailers face with rising costs, squeezed margins and falling demand. Many may feel that they have little choice but to reduce prices to hold onto customers but with their own inflationary pressures to contend with, bumper promotions before Christmas could damage already tight margins further. Whilst Christmas is by no means cancelled as consumers focus on one bright spot amongst the economic clouds, retailers are facing possibly their toughest festive season in a decade as shoppers look to trade down, search out bargains and purchase less to meet the economic challenges ahead.
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