Scottish Retail Sales Monitor
Underwhelming Scottish Sales Underline Need for Spring Budget Action
David Lonsdale, Director, Scottish Retail Consortium:
After a bright start January fell away to a disappointing month for Scotland’s retailers. In real terms sales fell by one percent, extending the run of contraction to four months. Sales started well around Hogmanay and the first week of the year, but once shoppers returned to work it appears a combination of tightened
“February brought more discomfort for hard-pressed Scottish shopkeepers as total retail sales growth during the month fell further to its lowest level in two and a half years. When adjusting for shop price inflation it was the eighth successive month of declining real terms growth. There were some bright spots. Some retailers benefited from purchases associated with St Valentine’s Day, buoyed by sales of cosmetics, fragrances, and chocolates. Grocery sales got a bump too from St Valentine’s Day as people marked the occasion at home rather than spend more going out to eat.
“This underwhelming headline figures reflect a continuing weakness in consumer demand, the dip in shopper footfall, and the easing in shop price inflation which previously flattered sales values. This weakness was most pronounced in bigger ticket categories such as white goods, furniture, and jewellery. By contrast, lower value items including health and beauty and home accessories fared reasonably well, with fashion buoyed by discounting as shops made room for new ranges. The growth in food continued to slow and was at its weakest level since June 2022.
“The figures suggest there has been as yet little discernible uplift to retail sales from the UK Government’s cut in employee national insurance contributions which were introduced in January. It underlines the need for the Chancellor to put supporting consumer sentiment and spending at the heart of his Spring Budget, including a restoration of tax-free shopping to tempt more international visitors to Scotland and the UK. If the UK administration reduces income tax rates for modest earners then Scottish Ministers should give a fair wind to considering whether Scots should benefit too.”
Linda Ellett, UK Head of Consumer, Retail and Leisure , KPMG:
“Despite, on the face of the it, figures showcasing an increase, the wider picture has heralded a slow start to the year in Scotland for its retailers.
“What looked like a promising start to February was soon replaced with a more downbeat end as a mix of poor weather and people watching their spending more closely following Christmas and New Year.
“Fitness and beauty were high points in terms of sales, but other non-food sectors were weak. Burns Night and A push for healthier eating since the start of the year saw food sales remain solid if not spectacular.
“News that the UK economy is technically in recession, as many households continue to adapt budgets to meet higher essential costs, including higher mortgage rates, will do little to ease the consumer reluctance to get out there and start spending again.
“With big increases in labour costs and business rates just weeks away, adding an already stressed cost agenda for retailers, many will be pinning their hopes on some good news in the Chancellors’ Spring Statement this week, to help kick start a spending revival on the high street.
“However, after two years of navigating the cost-of-living crisis, weary households continue to count the pennies.
“The assumption that having more spending power will lead to more spending isn’t cutting through at the moment, and retailers will continue to face significant downward pressures on demand for some time to come.”
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