Holiday spending lifts Scottish retail sales but consumers face 'multitude of headwinds'

Last month brought “some welcome rays of sunshine” for Scottish retailers as consumers snapped up holiday essentials but the forecast remains gloomy, a key report today reveals.

Releasing its latest sales monitor, the Scottish Retail Consortium (SRC) said total sales north of the Border rose by 4.4 per cent in June, compared with the same month last year. This was below both the three-month and 12-month averages while adjusted for inflation, the year-on-year increase was just 1.2 per cent.

Nevertheless, the SRC welcomed the “sprightlier set of trading figures”, noting that they came during a month bookended at the start by the Jubilee celebrations and at the end by “yet more disruption on the railways” and with shopper footfall continuing to lag.

David Lonsdale, SRC director, said: “Even when adjusted for the current higher level of shop price inflation, Scotland’s retailers turned in a positive performance in June.

“This was driven by the return of socialising and special occasions such as weddings and graduations, with sales of more formalwear and dresses doing well. Similarly, retailers got a lift from spending on the likes of sandals, swimwear and sunscreen as Scots got ready for their summer holidays.

“That said, there was further evidence of shopper caution as sales of larger ticket items such as furniture and electronic and electrical items were sluggish, despite further signs of improved stock availability on shop shelves.”

He added: “Whilst these more chipper results are pleasing the fact is one swallow does not make a summer. It will be a real challenge to sustain this improvement over the months ahead as retailers and consumers face into a multitude of headwinds.”

The report showed that total food sales increased by 2.7 per cent versus June 2021, ahead of the three-month and 12-month average growth rates.

Shoppers out and about in the centre of Glasgow. Picture: Jane Barlow/PA

Total non-food sales were 5.8 per cent higher year-on-year, while adjusted for the estimated effect of online sales, they increased by 1.4 per cent compared with June 2021.

Paul Martin, partner and UK head of retail at KPMG, which helps to produce the monthly sales monitor, said: “June brought some welcome rays of sunshine for Scottish retailers as annual sales growth improved compared to June 2021. While last month’s figures provide some reasons to be cheerful, ultimately the impact of inflation means any growth is paltry and doesn’t signify any true shift in gear for the Scottish economy.

“As the cost-of-living crisis continues to deepen, retailers face walking a fine line between protecting margins and further denting consumer confidence by passing on price rises whilst negotiating with their suppliers to share the cost increases.”

He added: “With warmer summer weather predicted and many consumers choosing to holiday at home this year, retailers will be hoping that the feel-good factor begins to improve confidence amongst some shoppers – as presently overall confidence levels are lower than sales may suggest.”

Inflation currently stands at an annual rate of 9.1 per cent but is expected to peak at about 11 per cent as higher energy bills feed through.