Slight increase in sales but shoppers remain cautious over price rises – figures

Scottish retail saw an increase in sales this month, but the industry has been warned consumer confidence may go down amid the ongoing cost of living crisis.

Sales went up by 4.4% compared with June 2021, when they had grown by 38.6%, according to figures released by the Scottish Retail Consortium (SRC).

This was below both the three-month and the 12-month average increases of 6.9% and 15.2%, respectively.

Adjusted for inflation, the increase was 1.2%.

David Lonsdale, director of the SRC, said figures from June last year were high because they were compared with June 2020 when most shops except “essential” ones were closed, with many “non-essential” shops unable to open between the national lockdown beginning in March and June 29 2020.

On a like-for-like basis, Scottish sales this year went up by 3.3% compared with June 2021, when they had increased by 34.2%.

This, again, is below the three-month average increase of 5.3% and the 12-month average increase of 12.4%.

Total food sales increased by 2.7% versus this time last year, when they had increased by 1.4%.

It meant this month’s food sales were above the three-month average of 2.5% and the 12-month average growth of 0.3%.

And all non-food sales went up by 5.8% in June compared with June 2021, when they had increased by 69.9%.

This was below the three-month average increase of 10.6% and the 12-month average of 27.8%.

Adjusted for the estimated effect of online sales, total non-food sales increased by 1.4% in June versus the same time last year, when they had increased by 67.2%.

This is below the three-month average growth of 5.5% and the 12-month average of 19.0%.

Mr Lonsdale said Scotland’s retailer saw a positive performance in June which was driven by returning of socialising and special occasions after the pandemic lockdowns, with the sales of more clothing, and also the summer period.

He added: “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.

“Whilst these more chipper results are pleasing, the fact is one swallow does not make a summer.”

Mr Lonsdale said it will be a “real challenge” to sustain the sale increases over the months ahead, adding: “Retailers and consumers face into a multitude of headwinds including rising inflation, weak foot-traffic which will be exacerbated by further rail disruption, and a fitful economy.”

Paul Martin, UK head of retail at KPMG said annual sales improved compared to June last year, but said ultimately due to inflation, any growth is “paltry” and “doesn’t signify any true shift in gear for the Scottish economy”.

He added: “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.

“Cost and efficiency will dominate retailers’ agendas as they are forced to make some tough decisions on which products make it to the shelves in order to remain price competitive for consumers.

“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.”