2 days ago
Economic uncertainty blamed for ‘lacklustre' retail performance last month
Analysists have blamed rising economic uncertainty for a 'lacklustre' July that saw Scottish retail sales fall in real terms compared with the same month last year.
According to figures from the Scottish Retail Consortium (SRC) and KPMG, total sales in Scotland rose 0.1% last month compared with July 2024, when they had decreased by 0.9%.
However when adjusted for inflation this represents a year-on-year fall of 0.5%.
Food sales in Scotland were down 1.4% compared with July 2024, when they had decreased by just 0.3%.
This was despite a strong opening to the month when hot weather led to a 'boost' in spending on barbecues and summer meals.
Non-food sales on the other hand rose by 1.4% compared with the same period last year, with analysists saying phones and some furniture and toy ranges performed well.
Adjusted for the effects of online sales, non-food sales increased 1.6% on July 2024, when they had decreased by 1.5%.
Ewan MacDonald-Russell, deputy head of the SRC, said: 'July was a lacklustre month for Scottish retailers as sales again disappointed.
'When adjusted for inflation retail sales in Scotland fell by 0.5%. That's a slight improvement on June's figures, but demonstrates shoppers continue to cut back on shopping as economic uncertainty continues to rise.
'Within the general disappointment there were some bright spots. Food sales shone in the opening half of the month as Scots took advantage of the warm weather to cook barbeque and summer meals.
'Phone sales did well, as did some toys and furniture ranges. Against that televisions continue to disappoint, with few households investing in high-end entertainment despite the summer plethora of sporting events.
'Fashion ranges performed poorly, albeit the likelihood is shoppers did their summer wardrobe shopping earlier in the year when the sunshine emerged.
'The harsh truth is Scots are holding back spending as worries about the economy grow.
'That is leaving shops in the lurch – facing higher costs as a consequence of last year's UK Government budget without the growth needed to pay those bills.
'With little sight the economic weather will brighten, many retailers, especially those on the high street, face increasingly unpalatable choices in the coming months.'
Linda Ellett, UK head of consumer, retail and leisure at KPMG, described the current trading environment as 'challenging' for retailers.
'The UK's fifth warmest July on Met Office record brought a boost to home appliance and food and drink sales,' she said.
'But rising inflation was also a driver of the latter and monthly non-food sales are only growing at around 1% on average at present.
'With employment costs having risen and inflation both a business and consumer side pressure, it remains a challenging trading environment for many retailers.
'While the majority of consumers that KPMG surveys are confident in their ability to balance their monthly household budgets, big ticket purchases are more considered in the context of rising essential costs and ongoing caution about the economy and labour market.
'Holidays are the priority for many this summer but those heading away have had to account for a higher cost of travel.
'Consequently, spending in some areas of the retail sector remains subdued and competition for consumer spend will remain fierce.'
The figures were published in the SRC-KPMG Retail Sales Monitor for July.
