Question mark over future of physical stores despite 'encouraging signs' ahead of lockdown lifting - SRC

Total sales north of the Border fell by 13.8 per cent last month compared with March 2019, when they had increased by 0.3 per cent, according to the latest sales monitor from the Scottish Retail Consortium (SRC) and KPMG

The switch to a two-year comparison from a year-on-year one has been made to provide a more meaningful picture of trading given the rollercoaster ride of Covid lockdowns and restrictions suffered during the bulk of 2020.

Last month saw a stark contrast between the fortunes of food retailers, where total sales were up 19.7 per cent on a two-year basis versus March 2019, and non-food, which was left nursing a 49.2 per cent decline as much of the “non-essential” retail sector remained closed.

An almost empty Buchanan Street in the centre of Glasgow as people observe the spring 2020 lockdown. Non-essential stores have been forced to close for months now under tighter restrictions, hammering trade, but industry leaders are hoping for a lift from April 26. Picture: John Devlin

Adjusted for the estimated effect of online sales, total non-food sales decreased by 10.5 per cent last month versus March 2019, when they had increased by 1.3 per cent.

Ewan MacDonald Russell, head of policy and external affairs at the SRC, said: “The decline in retail sales in March was much less steep compared to recent months, albeit still fell by nearly 14 per cent compared with the truer comparable trading period in 2019.

“It’s hardly surprising sales were down with most shops shut for the crucial run up to Easter, but there were some encouraging signs that shoppers are preparing to resume shopping when the lockdowns finally end.

“Food sales were very high in March, but that’s in part due to Easter spending falling in the comparable April in 2019. The continued shuttering of eateries last month also flattered the figures.

“Nonetheless, despite households being unable to meet, it appears consumers continue to splash out on the usual domestic Easter meal, with Easter eggs selling very strongly.

“Non-food sales continue to be weak, but strong online sales of children’s clothes in response to schools reopening indicate there may be better news ahead when people can leave their homes for non-essential reasons.”

The previous sales monitor showed that total sales had fallen by an even steeper 24.3 per cent in February compared with February 2020.

MacDonald Russell said the two big questions now were whether retail sales will bounce back due to pent up demand following the significant easing of lockdown, and if that uplift turns out to be sustained rather than temporary.

“So far this year the majority of non-food sales have taken place online – if that doesn’t change and people don’t return to the shops it will pose very significant questions for the future of physical retail stores, and in turn for the state of our retail destinations, local communities and tax revenues from business rates,” he added.

Paul Martin, partner and UK head of retail at KPMG, said: “March 2020 was a month that we’re unlikely to ever experience again, with panic buying followed by store closures and a collapse in sales. With that in mind, our comparison on a two-yearly basis provides us with more of an accurate idea of how well Scotland’s high street is performing.”

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