SRC & KPMG: Lifting of restrictions a let down as summer retail sales stutter

The lifting of coronavirus restrictions has been dubbed a ‘let down’ as Scottish total retail sales in August continued to perform below pre-pandemic levels.

According to the latest Scottish Retail Consortium (SRC) and KPMG Scottish Retail Monitor, total sales in Scotland increased by 3.2% compared with August 2020, when they had decreased by 7.5%. This was below the 3-month average growth of 18.1% and below the 12-month average of 9.2%.

However, on a 2-year basis, Total retail sales continue to perform below pre-pandemic levels, with sales down 8.9% compared with July 2019.

Scottish sales increased by 3.4% on a Like-for-Like basis compared with August 2020, when they had decreased by 8.9%. This is below the 3-month average increase of 16.1% and the 12-month average of 8.0%.

Total Food sales increased 0.5% versus August 2020, when they had increased by 1.5%. August was below the 3-month growth of 1.2% and the 12-month average growth of 2.2%. The 3-month average was below the UK level of 2.9%.

Total Non-Food sales increased by 5.4% in August compared with August 2020, when they had decreased by 15.1%. This was below the 3-month average growth of 32.3% and the 12-month average growth of 15.1%.

Adjusted for the estimated effect of Online sales, Total Non-Food sales increased by 3.1% in August versus August 2020, when they had decreased by 1.7%. This is below the 3-month average growth of 30.4% and the 12-month average growth of 27.6%. This was higher than the UK’s 3m average growth of 10.3%.

David Lonsdale, director, SRC, said: “August witnessed a further uptick in Scottish retail sales compared to the admittedly sombre comparable month last year, albeit the performance was softer than earlier in the summer and much of the momentum dissipated. The ending of physical distancing and removal of the cap on numbers allowed in-store a third of the way through the month failed to bring the anticipated boost, with retail sales still languishing almost a tenth below pre-pandemic levels.

“Fashion categories such as clothing, footwear and cosmetics were the standout performers, bolstered by the return of socialising and occasions such as weddings, along with staycations, the good weather, and the return to school. Other non-food categories saw sales wane, especially of larger items such as furniture, white goods, and electricals. Grocery sales nudged up a smidgeon, buoyed in part by BBQs as Scots took advantage of the good weather. However, this was the weakest growth in food since May, as eating out with friends and family became more prevalent.

“These figures are somewhat discomforting as we hurtle towards what is traditionally the crucial golden quarter of shopping in the lead up to Christmas, when many stores generate the revenues required to tide them through the leaner months early in the new year.

“Much of the industry continues to suffer from a protracted weakness in demand, particularly those more reliant on the hustle and bustle of traditionally high footfall locations in our city centres. The pressure on retailers to deliver a strong Christmas performance will only become more acute if a sustained increase in demand isn’t seen soon. This should prompt policy makers to consider what immediate action they could take to entice shoppers back and help consumer confidence and spending take wing.”

Paul Martin, partner, UK head of retail, KPMG, added: “Whilst still in growth mode, total retail sales growth compared to last year slowed during August. Sales also slowed in comparison to July, when Scotland moved to level zero nationwide for the first time.

“However, the strong performance of non-food categories, particularly fashion related goods, that have so far seen a lacklustre recovery shows demand remains strong as Scottish shoppers are continuing to embrace their new found freedom by heading to the high street.

“Despite the relaxation of restrictions on social gatherings, Scottish retailers are still operating in a challenging environment. Trading conditions will continue to be affected by factors including international travel restrictions and supply chain and labour challenges. Therefore, focussing on cost and efficiency whilst preparing to continuously evolve their model in the future will remain key for retailers.”

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