Retail leaders brand tax hike move 'astonishing' as Scottish sales suffer fresh decline

Scottish Retail Consortium says weak figures reaffirm the pressure facing consumers and retailers.

Scotland’s retailers enjoyed a bright start to 2024 but a combination of belt tightening and stormy weather quickly took its toll on January trading, figures today reveal.

Industry leaders warned the retail sector was under intense pressure facing months of negative or disappointing sales and said it was “astonishing” that business rates were set to rise. Releasing its latest sales monitor, the Scottish Retail Consortium (SRC) said that after being adjusted for inflation, there had been a year-on-year decline of 1 per cent in overall sales in January.

Ewan MacDonald-Russell, deputy head of the SRC, said: “After a bright start, January fell away to a disappointing month for Scotland’s retailers. Sales started well around Hogmanay and the first week of the year, but once shoppers returned to work it appears a combination of tightened belts and miserable weather kept them away from the high street.”

The miserable weather may have kept many shoppers away from the high street.

He said food sales remained “solid” last month, recording a total rise of 5.4 per cent, though a portion of that growth will be a reflection of rising prices rather than increased volumes. The SRC said customers had been focusing on healthier choices following the traditional festive season's indulgences, with a “small spark of Scottish fare” for Burns Night.

Total non-food sales fell by 1 per cent last month, compared with January 2023. Adjusted for the estimated effect of online trading, total non-food sales decreased by 2.9 per cent, year on year.

MacDonald-Russell added: “Non-food sales were weak across the board, with fitness and health products being the few bright spots. In contrast furniture sales were weak, a large concern for businesses who traditionally trade strongly in January.

“These weak figures reaffirm the pressure facing both Scotland’s consumers and retailers. In that context it’s astonishing Scottish ministers are increasing business rates by 6.7 per cent on medium-sized and large shops whilst exploring a new surcharge on grocers. The Scottish Government needs to look at the reality of Scotland’s economy and start helping, not hampering, Scotland’s business community if they want to help deliver economic growth and increase tax revenues.”

Paul Martin, partner and UK head of retail at KPMG, which helps to produce the monthly sales monitor, said: “It may be a new year, but the hangover of low consumer confidence remains, with retail sales growing by a lacklustre 1.2 per cent on the high street in Scotland, and online operators seeing yet another month of negative sales performance. It remains a difficult environment for retailers facing significant downward pressures on demand, a strong promotional environment and uncertainty hitting supply chains due to rising geopolitical tensions.

“Retailers will be hoping that continued good news on the economy, coupled with the small boost given to some consumers as cuts in national insurance start to feed through to pay packets will boost confidence and convert to sales. With increases in labour costs and business rates around the corner, retailers will be hoping for good news in the Chancellors’ upcoming Budget to give consumers that lift they need to start spending again,” he added.

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