No recovery in sight as Scottish retailers head into golden trading quarter

There is “no recovery in sight” for Scotland’s embattled retail sector ahead of the crucial festive trading period after another month of disappointing sales, an industry report today warns.

A virtually empty Buchanan Street in Glasgow during the spring lockdown and retail leaders have warned of another testing period for the sector in the months ahead. Picture: John Devlin

The latest retail sales monitor from the Scottish Retail Consortium (SRC) and KPMG show that sales fell by 6.3 per cent on an underlying like-for-like basis last month, compared with September 2019.

Ewan MacDonald-Russell, head of policy and external affairs at the SRC, said Scotland’s high streets were “nowhere near returning to growth”, despite relatively healthy food sales last month.

Total sales decreased by 6 per cent during September while adjusted for deflation the decline was 4.4 per cent. Total food sales were up 3.7 per cent but non-food sales suffered a fall of 14.2 per cent.

MacDonald-Russell said: “A real terms fall of 4.4 per cent is the eighth successive month of falling sales and a huge concern to the industry ahead of the crucial Christmas trading period.

“Food sales returned to more buoyant growth, correlating with the end of the Eat Out to Help Out scheme. Whilst positive for grocers, there was little evidence of customers stockpiling over the month, instead it appears to be a shift from discretionary to essential spending.”

He noted that non-food sales had continued to diverge sharply by category. White goods, household essentials, and electronics continued to perform well last month, with televisions and gaming boosted by new releases.

In contrast, fashion, footwear and beauty products continued to perform poorly with customers only buying necessary rather than indulgent products.

“There is also some evidence consumers are already turning to Christmas shopping,” MacDonald-Russell noted, “presumably to avoid queuing outdoors in the depths of the Scottish winter”.

He added: “Overall, the Scottish retail industry is in a fragile condition heading into the golden trading quarter.

“There are severe headwinds ahead. Whilst shops can continue to trade, the lockdown of hospitality businesses removes reasons to visit town and city centres.

“The costs of operating safely continue to skyrocket – few retailers can operate profitably under these conditions. With that in mind policymakers need to avoid further pressure on the industry. There is no capacity to absorb further costs whilst the current crisis continues.”

Paul Martin, partner, UK head of retail at KPMG, said: “Whilst September’s figures paint a slightly less bleak picture for Scotland’s high streets, the challenges facing retailers show little signs of abating.

“Total year-on-year sales were down 6 per cent, which is a modest improvement from August’s 7.5 per cent drop. However, with the resurgence of stricter lockdown rules and the prospect of a no-deal Brexit, consumer confidence remains low.

“Within specific categories, it’s clear that consumer expenditure has continued to shift away from non-retailing categories like travel and leisure, whilst the focus remains on food, furniture and electronic goods.

“Elsewhere, non-food and fashion and footwear retailers suffered a month of woeful performance, with demand seen only for children’s clothing, in a period in which outfits for seasonal events should usually have been purchased.

“Shoppers are certainly being less impulsive and far more targeted with how and where they choose to buy goods, given current uncertainties and economic concerns.”

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