Scottish Retail Sales Monitor
Stretched Household Finances Tempers Scots Retail Recovery
David Lonsdale, Director, Scottish Retail Consortium:
The value of Scottish retail sales was marginally down in April compared to the same period prior to the pandemic. Whilst the figures lost a little of their lustre from the more buoyant March, retail sales were still at their second highest level for two years and remained close to pre-pandemic levels. That said, the figures were flattered somewhat by rising shop price inflation.
Several non-food categories such as clothing and accessories, footwear and beauty products turned in a sprightlier performance and edged closer to pre-pandemic levels, lifted by the return to office working, more social occasions such as weddings, and holidaying. Grocery sales got a boost from the timing of Easter and return of family get-togethers, although the recent spurt of growth in this category in the early months of this year cooled off. Sales of bigger ticket items including electricals, household appliances and furniture were lacklustre, as recent spikes in inflation and taxes left pay-packets lighter.
The retail recovery is still very much in its infancy and the outlook has to be tempered in light of the pressures on consumer spending. Household finances are under strain as inflation, tax rises and other bills take a bite out of shoppers’ purses and wallets. Disposable incomes simply do not stretch as far as they used to, presenting Scotland’s retailers with a more challenging marketplace.
Paul Martin, Partner, UK Head of Retail, KPMG:
The cost-of-living crisis came home to roost for Scottish retailers in April, with sales growth stalling after a relatively promising start to the year.
Pressure on consumers tightened considerably with the increase in energy tariffs and the higher cost of food and other commodities. Easter holiday spending helped food sales grow, and while they are ahead of pre-pandemic levels, are unremarkable when inflation is taken into consideration.
Against the backdrop of falling consumer confidence and a possible recession ahead, the retail sector faces a bumpy road with cost pressures from all directions.
Many retailers may benefit from pent up demand in the short-term although in the mid-term will have no choice but to raise prices to protect margins. But the longer we see high inflation and real household incomes falling, the more likely it is that consumers will change their spending behaviour, prompting a decline in the health of the retail sector and possibly more casualties on the high street.