Figures show shoppers cut back on spending on extras to focus on essential goods

Consumers are continuing to cut back on discretionary spending to focus on essential goods, monthly retail figures have shown.

Scottish Retail Consortium (SRC) figures released on Wednesday, covering March, showed that while total sales increased by 8.8%, this was offset by rising inflation.

Retailers will hope Easter brought a boost to sales, but the outlook remains difficult, the SRC warned.

Sales increased by 44.4% last month, compared with 35.6% in March 2022.

Adjusted for inflation, the year-on-year change was 0.1%.

Food sales increased by 14.3% versus March 2022, when they had decreased by 3.8%. This was above the three-month average growth of 13.0% and the 12-month average growth of 8.9%. The three-month average was above the UK level of 8.5%.

Non-food sales increased by 4.1% in March compared with last year when they had increased by 68.6%, below the three-month average increase of 5.5% and the 12-month average of 6.5%.

Ewan MacDonald Russell, deputy head at the Scottish Retail Consortium, said: “Scottish retail sales remained flat in March with a miniscule drop by 0.1% in real terms on the previous year. The 8% rise in sales was more than offset by increased inflation as the cost of living continues to increase for hard-stretched households.

“The figures show consumers cutting back on discretionary spending to focus on essentials, with food sales rising by over 14% compared to 2022; which is still a real terms fall in spending.

“Consequently, high street retailers continue to find trading challenging, with shoppers’ spending focused on sales and discounts.

“Retailers will hope Easter brings a small boost. However, the outlook remains very difficult for all businesses.

“In these circumstances any new costs imposed on businesses will be passed directly to consumers.

“Therefore we hope to see the Scottish Government focus on making growing Scotland’s economy the priority of priorities rather than adding to that cost burden.”

Paul Martin, partner, UK head of retail at accountancy firm KPMG, said: “As inflation continues to offset any true sales growth in Scotland, and the cost-of-living crisis continues to bite, the picture for the retail sector remains stagnant as we approach the summer months.

“High street retailers saw some limited growth across most categories in March but consumers are actively cutting back and instead spending more on home comforts.

“Rising utility costs, council tax and mobile bills coupled with frozen personal tax rates and the withdrawal of energy bill support will see consumers having to further curb discretionary spending as we move through April.

“Of course, some retailers are delivering growth and will be optimistic of their performance, although this is largely down to taking share from competitors through customer insights and innovation rather than any overall growth.

“The challenge for retailers now is having to face into their own rising cost agenda, as inflation continues to challenge margins, whilst ensuring affordability, choice and value for customers.”