Sales slump by a quarter as stores 'fight for survival'

Retail sales slumped by more than a quarter in May, with experts suggesting stores face a fight for survival due to the coronavirus crisis.

The SRC-KPMG Scottish Retail Sales Monitor found total sales in Scotland last month were down 27.6% in comparison with May 2019, although this was an improvement on the record low of 32.2% recorded in April.

Total food sales increased by 3.6% for May 2020 compared to a year ago, with grocery retailers reporting a higher basket spend than before the Covid-19 crisis.

But there was a 53.2% drop in total non-food sales.

Ewan MacDonald Russell, Scottish Retail Consortium head of policy, said: “While the figures were an improvement on April’s record low, restrictions on trading are bringing many retailers to the brink.

“Food sales finally returned to growth, although the 3.6% rise is unimpressive considering the continued closure of restaurants, pubs, catering and most food to go outlets.”

He added: “The current crisis is forcing retailers who are currently barred from opening to accelerate the move to online and multi-channel sales.

“When combined with weak consumer demand and confidence, there is a real risk of entering a vicious economic cycle where reduced retail, hospitality, leisure and other sales leads to more pressure on businesses through the supply chain, which leads to fewer workers.

“Increased unemployment will exacerbate this further. It’s therefore essential we have a clear and unambiguous indicative timetable for high streets reopening, a clear plan so shoppers can travel to and shop safely in town and city centres and a short-term economic stimulus package to encourage consumers to start shopping again.”

Online sales have become increasingly important, according to the latest figures, especially for non-food sales.

Games and electricals performed well along with a rise in kitchen appliances as households turn to cooking and baking.

The figures also indicate fashion and footwear sales have struggled as schoolchildren and office workers are not needing uniforms or workwear.

Paul Martin, KPMG UK head of retail, said: “There is a glimmer of hope for the industry when you compare it with April’s record low of 32.2%.

“The food sector is understandably holding its own but the focus now shifts to the hundreds of independent and chain non-food retailers preparing to open their doors as restrictions ease.

“In recent years we were already reporting on shifting consumer habits. The Covid-19 pandemic has accelerated that transformation.”

He added: “For Scotland’s retailers, the battle for survival is far from over.

“With the safety of employees and customers at the forefront, retailers will need to gradually rebuild footfall and takings with innovative public health measures and a margin enhancing sales strategy.

“June could become a crucial month as the sector, and consumers, come to terms with a very different looking high street.”