Scottish retailers face challenging environment for rest of year, experts warn

Retailers are facing a “challenging” environment after back-to-school shopping and summer spending failed to boost sales, according to the latest figures.

Data from the Scottish Retail Consortium (SRC) KPMG Scottish retail sales monitor showed that total sales in Scotland decreased by 0.5% in August 2024 compared with the same month in 2023, when they had grown 5.6%.

Adjusted for inflation, the year-on-year decline was 0.2%.

Scottish sales decreased by 0.3% on a like-for-like basis compared with August 2023, when they had increased by 5.2%.

This is above the three-month average decrease of 1.2% and below the 12-month average growth of 0.9%.

David Lonsdale, SRC director, said: “Scottish retailers suffered a hat-trick of falling sales figures during the three months of this summer as August sales dipped below the previous year’s performance.

“However, the small 0.2% real terms fall was an improvement on July giving hope things might pick up as trading moves into the autumn.

“Back to school sales were disappointing as consumers looked to save by switching to pre-loved items, an area retailers are increasingly involved in.

“Food sales were flat, but against very strong figures from last year when inflation was running hot, indicating grocers may have to adapt to more normal conditions.

“Unfortunately, whilst trading is stagnant, new government initiatives remain a concerning growth area.

“This week’s programme for government will be a test to see if Scottish ministers are paying attention to the travails of the business community, who are already grappling with the implications of the new UK administration’s legislative programme.

“If there are further significant or unreasonable regulatory burdens announced then industry will question whether the Government is truly focused on Scotland’s economic recovery.”

The figures, which cover the period from July 28 to August 24, showed that total food sales decreased by 0.3% versus August 2023, when they had increased by 8.6%.

Total non-food sales decreased by 0.7% in August compared with that month in 2023, when they had increased by 3.1%.

Adjusted for the estimated effect of online sales, total non-food sales decreased by 0.3% in August versus August 2023, when they had increased by 2.5%.

This was above the three-month average decline of 2.5% and 12-month average decline of 1.7%.

Linda Ellett, UK head of consumer, retail and leisure at KPMG, said: “Despite summer finally making an appearance, and a slight uptick in consumer confidence, shoppers did not catch up their spending during August, with a slight dip in sales growth reflecting the challenging retail environment that is likely to dominate for the rest of this year.

“Consumer sentiment is gradually starting to improve, but there still remains some nervousness around potential tax rises and the cost of putting the heating back on when the cooler weather arrives.

“The fragile nature of consumer confidence means shoppers will continue to be driven by price and value, moving from brand to brand to find the best price benefit and we are likely to see retailers using promotional activity to seek to win at this.”