Does Scottish retail face a sparkling or tarnished festive period?

New figures on the performance of Scotland’s retail sector paint a somewhat bleak picture in the run-up to the key festive period – the so-called “golden quarter” – but is the outlook really that gloomy?

Will shoppers be letting loose at the tills in coming months - or tightening the purse strings? Picture: Jane Barlow/PA Wire.

The latest retail sales monitor from the Scottish Retail Consortium (SRC) and KPMG has not exactly given huge cause for optimism, indeed saying there is “no recovery in sight” for the beleaguered sector as it revealed that sales fell by 6.3 per cent on an underlying like-for-like basis last month, compared with September 2019.

Scotland’s high streets are “nowhere near returning to growth”, Ewan MacDonald-Russell, head of policy and external affairs at the SRC said in the report. “A real terms fall of 4.4 per cent [adjusted for deflation] is the eighth successive month of falling sales and a huge concern to the industry ahead of the crucial Christmas trading period,” he said.

Retailers are operating on streets where neighbouring restaurants and pubs in the Central Belt are closed for another week, for example, with the prospect of a no-deal Brexit among many other storm clouds. What’s more, consumers are tightening the purse strings amid a wave of job losses that shows no sign of abating, especially with the imminent end of the furlough scheme.

The Scotland Loves Local campaign urges people to help the economic recovery by supporting businesses in their area. Picture: McAteer Photograph.

Mr MacDonald-Russell told The Scotsman that retail serves as a canary in the coalmine in terms of revealing broader economic health, adding that shops have had a “pretty tough” year already, and he expects that many more will close in coming months.

“It’s not really a question of are all the shops going to make it – it's how few shops are going to make it,” he said, with more economically vulnerable places with few shops remaining at particular risk. However, he stressed that of the 22,000 shops in Scotland, the majority will still be here, but Covid has fuelled the pace at which closures were already happening.

Christmas is a “litmus test” for what’s happening in the industry, he added. “If things stay as they are, or we don't get positive sales through Christmas, then it's really hard to see how a lot of shops and how many high-street shops will make it through, certainly in different parts of the country,” he said.

As for trends, the KPMG-SRC report noted growth in people snapping up food, furniture and electronic goods as they looked to maximise the comfort of their surroundings – and traditionally, festive trading is boosted by discretionary spend in both grocery and non food, Mr MacDonald-Russell said.

But he also predicted there could be a little “bump” in both tills and Christmas bells ringing as people dip into their pockets in the absence of ways to spend their money elsewhere.

His comments came as it was also revealed yesterday that Scotland’s GDP increased by 2.6 per cent in August, albeit below the levels of trading activity before the pandemic struck.

Impact

As for what Mr MacDonald-Russell would like the coming months to look like for retail, he cited measured growth in sales. “If we were getting back even – it sounds [rather] depressing – but to flat or moderately positive figures, I think it would have an enormous difference on the industry,” he said.

“It would also really influence the decisions businesses have to make about ... how many shops they keep open, how many people that need to go in there. These are really live decisions right now for businesses – they're not in the five-year strategy, it's a five-month strategy at the moment.”

As for other measures, Scottish Labour leader Richard Leonard earlier this week called on the Scottish Government to launch a "Save Scotland's High Street" fund amid growing concerns over deserted town and city centres across the country.

Existing steps to gee up shops north of the Border include the Scotland Loves Local campaign, which is spearheaded by Scotland’s Towns Partnership (STP), and urges people to help the economic recovery from the Covid-19 pandemic by supporting businesses in their area and “thinking local first”.

STP chief officer Phil Prentice said that it was “still going to be Christmas – just not as we know it” – and he took a bullish view of the next few months, seeing strong potential.

He also made the point that tourism, leisure and hospitality are suffering keenly from the extended coronavirus restrictions, but “the fact that retail is still open is a welcome respite”.

Adapting

Mr Prentice added: “Our retail sector has adapted fantastically to the pandemic – and we feel that there are further opportunities as we head towards Christmas. Since lockdown, many retailers have remained opened – supermarkets, convenience stores, grocers, takeaways, bike shops, pharmacies etc. As restrictions eased, we’ve seen many more retailers and services reopen. Many have bounced back successfully, benefiting from significant pent-up demand."

Working from home has enabled people to reconnect with their local high streets, he added, saying: “This is the underpinning message of Scotland Loves Local.”

He also acknowledged, as did Mr MacDonald-Russell, the virus had to be controlled. “Our collective focus should be to follow the rules and, wherever possible, support our local retailers and therefore our economies. Our retailers have created safe environments – and many have also moved online and offered home deliveries. We need to support them.”

The “challenging” winter will see rising unemployment, and “sadly some businesses will close – however, we must continue to pull together and work closely as communities to ensure that the kindness and solidarity demonstrated throughout the summer gets us through a tough winter”.

He said: “History tells us we will emerge from the pandemic, so it’s vitally important that the renewal work being supported by the [Scottish] Government around towns, local economies and communities isn’t overlooked. This will provide Scotland with a blueprint to rebuild towns and cities which are more inclusive and more sustainable in the longer term.”

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