High street snapshot: Scottish sales values hit pre-pandemic levels but recovery driven by inflation

Scottish retail sales have recovered close to pre-pandemic levels, new figures reveal, but “economic storm clouds” continue to threaten the sector.

Releasing its latest sales monitor, the Scottish Retail Consortium (SRC) said total sales north of the Border nudged up 0.6 per cent last month, compared with March 2019.

It made the three-year comparison as, in March 2020, non-essential retail stores began to close, while in March 2021 Scottish retail was in lockdown, pushing many consumers to buy goods online.

The sales figures are not adjusted for inflation and the SRC noted that a portion of last month’s growth will be a reflection of rising prices rather than increased volumes.

Shoppers hit the streets in Glasgow city centre. Picture: Jane Barlow

Ewan MacDonald-Russell, head of policy at the SRC, said: “March sales sparkled compared to recent months as shoppers returned to spending. This is the first time sales have been close to pre-pandemic levels since the Covid crisis hit and coincides with the removal of nearly all Scottish Covid restrictions.

“However, these improved figures are at least in part a result of rising shop prices as retailers grapple with a host of inflationary costs.

“Whilst these sales figures are encouraging, the economic storm clouds continue to concern retailers. Costs continue to rise and will worsen in April as non-domestic rates bills return for many retailers.

“Rising inflation means prices are likely to continue rising, which will put immense pressure on households' discretionary spending which has significant implications for many retailers.”

Total food sales were up 6 per cent last month, versus March 2019, when they had decreased by 0.2 per cent. However, March 2022 was below the three-month average growth of 6.2 per cent.

Total non-food sales fell by 3.9 per cent last month, compared with March 2019, when they had risen by 0.7 per cent. This was better than the three-month average decrease of 11 per cent and the 12-month average decline of 16.9 per cent.

Adjusted for the estimated effect of online sales, total non-food sales fell by 23.4 per cent last month, versus March 2019.

MacDonald-Russell added: “Food sales rose by 6 per cent in March driven by higher inflation alongside customers focusing more on eating at home than at eateries. The first Mother’s Day in three years where Scots could visit family led to strong food sales as well as a boost for fashion and beauty lines.

Retailers also noted the endemic supply challenges had eased slightly this month; helping furniture and electrical shops.”

Paul Martin, partner and UK head of retail at KPMG, which helps to produce the monthly sales monitor, said: “As households feel the pressure, retailers are facing their own battle with rising costs and inflation, and are walking a tightrope between absorbing rising costs themselves or passing these on to consumers.

“Successful retailers will continue to maintain a clear understanding of their customer, what they want to buy and how, whilst balancing attention on areas that can yield cost and efficiency gains.

“It remains to be seen whether or not consumers will reduce physical and virtual spending to offset rising household bills and reduced household incomes.”

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