Scottish Retail Sales Monitor

Alarm Bells not Tills Ring for Retailers Ahead of Christmas

Ewan MacDonald-Russell, Deputy Head, Scottish Retail Consortium:

"Black Friday sales were a damp squib for Scotland’s retailers as sales fell in real terms in November. Adjusted for inflation retail sales fell by 1.2 percent, the fifth successive month of declining performance; including the first two months of the ‘golden trading quarter’.
“Food sales rose by 5.8 percent, but this was below the 3-month-average as reduced levels of inflation start to feed through to consumers. Cosmetics and fragrances performed reasonably well because of early discounting, with perennial favourite beauty advent calendars proving popular. Shoppers continue to shy away from larger purchases, and it appears many are holding back festive gift spending, either hoping for further discounts ahead of Christmas itself or just cutting back in the face of the continued cost of living squeeze. If retailers oblige with discounts, that will further eat into already narrow margins in what is traditionally the most profitable trading period.
“These figures are concerning for hard-pressed retailers many of whom desperately need a good last quarter of 2023 to get them through the traditionally fallow months at the start of next year. Retailers already know they will be facing large increases in wage costs in the new year. If the Scottish Government doesn’t take action in it’s upcoming Budget to meaningfully blunt a rise in business rates then shops will very likely have to make very difficult decisions in 2024 to balance the books.”

Paul Martin, Partner, UK Head of Retail, KPMG:

“As Christmas approaches, sales growth in November remained lacklustre at 3.1% across Scotland, despite retailers making a significant push with Black Friday deals.
“The growth drivers persist in categories like food and drink, health, as well as personal care and beauty. This trend indicates a shift in consumer preferences towards more budget-friendly gifts, likely as a response to the cost-of-living crisis affecting many households. In the final month of the year, economic conditions continue to test consumer resilience, and with sales growth struggling, the emphasis on price as the primary purchasing driver is evident. We are likely to see a prolonged and strategically targeted period of discounting as retailers vie for a diminishing pool of consumer spending and aim to clear their stock.
“The critical golden quarter in Scotland has already experienced two months with sales growth below 3%, making it a weak Christmas trading period. The prospect of excess stock remaining unsold before Christmas raises the possibility of substantial January sales, potentially exerting even more pressure on already tight profit margins. Looking ahead to the early months of 2024, the challenges are expected to persist, posing a threat to the sector and potentially leading to more casualties, especially for online retailers facing over 28 consecutive months of sales decline.”


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