Scottish Retail Sales Monitor
Meagre Sales Growth as Volumes Fall
Ewan MacDonald-Russell, Head of Policy & External Affairs, Scottish Retail Consortium:
The bleak economic news translated into meagre Scottish retail sales as customers cut back on spending in May. In real terms sales fell by 1.1 percent compared to 2021 with consumers responding to the cost-of-living crisis by reigning in their spending or trading down.
Food fell by 2.5 percent in real terms as feeble sales were significantly offset by higher input costs; exacerbated by the conflict in Ukraine. Non-food sales were similarly weak, with white goods and homeware especially poor, albeit fashion was bolstered by sales of formalwear as people started to attend weddings and similar events after a three-year hiatus.
Retailers are facing the difficult truth that their customers are becoming more price conscious in response to high inflation. Those customers are responding by reducing their discretionary spending, both by buying fewer items but also trading down from premium to value ranges. Government at both Holyrood and Westminster need to keep a close eye over the coming months and stand ready to take action if the situation doesn’t resolve itself soon.
Paul Martin, Partner, UK Head of Retail, KPMG:
The sun didn’t shine for long during May, and clouds remain for Scottish retailers after a less than convincing May saw sales growth stall for the second month running.
The rising cost of living is still top of the agenda for retailers, with consumer confidence a key factor to watch out for. Retailers will be hoping that warmer weather and a summer feel-good factor kick builds confidence amongst some shoppers – as presently overall confidence levels are lower than sales may suggest.
It also remains to be seen what effect the Chancellor’s recent announcement to provide a universal discount on energy bills will do to confidence levels, as consumers continue to make difficult choices about how to spend their money.
Cost and efficiency are still top of agenda for most operators, and crucially, understanding how they can protect their margins whilst remaining price competitive for consumers.