SRC-KPMG: Downpours dampen retail demand
Poor weather across Scotland has decreased retail demand in Scotland, according to the Scottish Retail Consortium and KPMG Scottish Retail Sales Monitor for February 2020.
The monitor found that total sales in Scotland fell by 0/8% compared with February 2019, when they had increased by 4.5%. This is below the 12m average decline of 0.3%. Adjusted for deflation, the decrease was 0.1%.
In February, Scottish sales also decreased by 1.6% on a like-for-like basis compared with February 2019, when they had increased by 3.7%. This is below the 12-month average decrease of 1.0% respectively.
The monitor revealed that total food sales increased 2.9% versus February 2019, when they had increased by 3.0%. This is above the 3-month and 12-month averages of 2.4% and 2.3% respectively. The 3-month and 12-month averages remained above the UK’s levels of 1.0% and 1.2% respectively.
Whereas total non-food sales decreased by 3.8% in February compared to February 2019, when they had increased by 5.8%. This is below the 12-month average decline of 2.5%.
Adjusted for the estimated effect of online sales, total non-food sales decreased by 2.4% in February versus February 2019, when they had increased by 8.1%. This is below the 12-month average decline of 1.5%.
Paul Martin, head of retail at KPMG UK, said: “The start of the year offered Scotland’s retailers a brief glimmer of hope, with a modest increase in sales, but the latest figures from February simply hammer home the reality facing the sector. With total sales down almost 1% compared to the same period last year, the industry is being forced to accept a ‘new norm’ driven by shifting consumer behaviour and global instability.
“While Brexit was the dominant theme in 2019, retailers are now preparing for a potentially far greater challenge from coronavirus, with demand likely seriously impacted for at least the next few weeks. Despite the overwhelming scale of the problems ahead, the retail sector in Scotland is working tirelessly to evolve and survive. Now is the time for political leaders to work closely with the industry to prevent potentially irreversible damage from this global crisis.”
David Lonsdale, director at the Scottish Retail Consortium, added: “These figures underline how tough trading conditions were in Scotland’s retail destinations in February, even before the coronavirus onslaught of the past fortnight, with retail sales essentially flat once shop price inflation is considered.
“There was little respite for shoppers or shopkeepers, who were buffeted by a maelstrom of multiple storms and dismal weather which kept customers at bay, shrinking footfall in the process. It comes against the backdrop of an industry going through an intense period of structural change.
“While grocery, health products and some indoor categories such as electrical items like white goods and TVs fared well, fashion and footwear wilted badly and recorded its weakest performance since last May.
“Even before the onset of coronavirus, retailers were facing serious headwinds of drooping demand and rising costs. The devolved government has in recent days responded to the urgent situation with both financial and practical assistance. Ministers have flexed the rules around out-of-hours delivery times to shops and depots, allowed firms to defer business rates payments in order to aid cash flow, and scrapped next month’s across-the-board business rates increase. These steps will help bring a little confidence and cash flow to pressured businesses, albeit more may well be required as the situation develops.”