Retail in Scotland ‘improving modestly’ despite sixth consecutive sales drop

Retail in Scotland is “improving, but incredibly modestly” while facing challenges brought on by the coronavirus pandemic, according to experts.

However, the latest figures in the Scottish Retail Consortium (SRC)-KPMG Scottish Retail Sales Monitor indicate sales have fallen for the sixth month in a row compared to the same period last year.

Total sales in Scotland decreased by 7.5% compared with August 2019 when they had decreased by 0.5%.

Sales were down 8.3% in July, 18.6% in June and 27.6% in May – which was an improvement on the record low recorded in April (32.2%) but still higher than the 13% fall in March.

Food sales were up 1.5% against the same month last year (a 2.7% increase) but this is also the lowest since June 2019.

Non-food sales were also down 15.1% last month when a 3.2% drop was recorded in 2019, but when adjusted for the estimated effect of online sales, the figures change to a 1.7% fall this August and 2.4% decrease last year.

Paul Martin, KPMG UK head of retail, said: “August’s figures reinforce the overwhelming challenges facing Scotland’s high streets.

“With total year-on-year sales down 7.5%, the situation is improving, but incredibly modestly.

“An ongoing lack of consumer confidence, combined with local lockdowns, and a massive decline in summer tourism numbers have in summary created arguably the most difficult period Scotland’s retail sector has witnessed in modern times.

“All eyes will now be on the autumn period. As coronavirus cases rise and the furloughing of staff eases off, there are real fears the industry could face even greater challenges ahead.

“The focus now will be on restoring confidence, working collaboratively as a sector to drive up footfall, and reducing costs as much as possible, in the hope that we’ll see a more rapid return to growth towards the end of the year.”

Grocery sales recorded its weakest performance in over a year as eating out resumed during the Eat Out to Help Out campaign.

Non-food categories continued to recover with online purchases and sales of larger household goods such as sofas, beds, white goods and TVs.

Computing also continued a strong run with ongoing working from home as well as students preparing to return to colleges and universities.

And despite pupils also returning to school, clothing and footwear underperformed again.

However, David Lonsdale, SRC director, said gifting items lifted during the month which was “an indication of early festive purchasing”.

He added: “Six months on from the start of the pandemic and the revival of retail is proving painfully slow and protracted.

“The recovery in stores witnessed over recent months petered out in August, with Scottish retail sales now having fallen for six months in a row compared to the same period last year.

“Any hopes of a return to growth, or even better a modest claw back of lost sales from the earlier part of the pandemic, will have been thwarted by this latest data.

“The past six months have been bruising for the industry, and even with the crucial Christmas trading period coming in to view the near term outlook remains uncertain.

“Much of the industry continues to suffer from a protracted weakness in demand, particularly those more reliant on the hustle and bustle of high footfall locations in our city centres and shopping malls.”