Scottish Retail Sales Monitor
Steady Growth as Shoppers Make Most of Sunshine
Ewan MacDonald Russell, Head of Policy & External Affairs, Scottish Retail Consortium:
In real terms Scottish retail sales flatlined in August as a modest rise in the value of sales was wiped out by the impact of record rising inflation. Food sales rose by 5.3 percent as shoppers increased their grocery budgets – but that hides the reality that customer’s pounds are buying fewer products. Retailers did see shoppers changing their food shopping to purchase more outdoor food to take advantage of the sunshine – but that was instead of other purchases.
It was a similar story for high street retailers. Whilst summer clothing and items sold well, that was very much at the expense of other items. It appears customers are laser-focused on what they need at the moment when purchasing. That meant even heavily discounted out-of-season or discretionary products were ignored in favour of shoppers only buying what they feel is necessary right now. This is further reflected in continued very weak sales of homeware, furniture, and large electrical items.
All the evidence suggests the cost-of-living crisis is already hitting the high street. The more shoppers cut back on discretionary spending the more difficult things will become for already beleaguered retailers. Those businesses are also dealing with huge inflationary pressures which are exacerbating the difficult trading environment. Unless the Scottish and UK Government take swift action it may be a bitter winter for Scotland’s shopkeepers.
Paul Martin, Partner, UK Head of Retail, KPMG:
Scottish consumers continued to spend at the tills in July, despite consumer confidence polls being at an all-time low. Scots were determined to enjoy delayed holidays and a first unrestricted summer with good weather.
While this growth is positive, it’s likely to change as consumers arrive back from summer breaks to holiday credit card bills, another energy price hike and rising interest rates. With these stronger cost-of-living headwinds on the horizon, consumers will have to prioritise essentials, and discretionary product spending will come under pressure.
As margins continue to be challenged, and costs continue to rise, a significant drop in demand during the autumn will negatively impact the health of the retail sector. Successful retailers will need to carefully anticipate customer buying patterns in the months ahead, and make sure they balance their offering with the right products, prices and promotions.
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