Food helps fuel Scottish sales growth but concerns remain

A surge in Scottish food sales has helped counterbalance a drop in other parts of the retail sector, according to a report published today.

Grocery sales rose 5.7% last month, but shoppers' budgets are under pressure from rising inflation. Picture: Robert Perry

The Scottish Retail Consortium (SRC) and KPMG Scottish Retail Sales Monitor for May found a like-for-like sales increase north of the Border of 0.8 per cent year-on-year. Grocery sales increased by 5.7 per cent after May last year saw a decrease of 0.9 per cent.

There was a 3.1 per cent drop in other Scottish sales in May while total UK like-for-like sales increased 0.5 per cent in the month.

SRC director David Lonsdale said: “Unsurprisingly, there was a marked deceleration from the octane-fuelled performance witnessed during April, which was driven by Easter sales.

“Whether this owes more to shoppers catching their breath, or reflects a more prolonged period of cooler retail sales amid growing uncertainty over the outlook for household disposable incomes, remains to be seen.”

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He also said that while grocery sales again demonstrated a good performance, “that growth is partly being driven by rising food price inflation”, while non-food retail sales “remained in the doldrums”.

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Lonsdale highlighted more focus on value and affordability, with a consequent fall in sales of larger or bespoke household items. Sales of mobile phones were good, as was the case for summer-related women’s footwear.

He added: “For Scotland’s retailers, all eyes over the coming months will be on the direction of consumer spending, with family finances set to be buffeted further by overall inflation outstripping the growth in wages, and as recent domestic cost increases such as council tax take hold.”

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Craig Cavin, head of retail in Scotland for KPMG, said: “Food sales continued to be the main driver of sales in May, as the gap in performance between food and non-food persisted.

“Continued inflationary pressures and stagnant wages point towards consumers channelling their spending towards food and drink essentials, and sticking to the basics for the likes of clothing and health and beauty items.

“Non-food retailers, particularly fashion outlets, will be glued to the weather forecast as we get into the warmer months, and shoppers turn their attention to shorts and sandals. Last year’s Euro Championships boosted summer TV sales, but the lack of a big-ticket football event means non-food retailers will look to annual attractions like Wimbledon to bolster sales.”

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