Retail bosses put big challenge to Scottish Government after 'hat-trick' of falling sales figures
Business leaders have warned that further regulatory burdens and higher taxes would bring into question whether the Scottish Government is “truly focused on Scotland’s economic recovery” after a dismal summer for the retail sector north of the Border.
Figures released today by industry body the Scottish Retail Consortium (SRC) reveal that total sales fell 0.5 per cent last month, compared with August 2023. This falls shy of the 12-month average growth of 1 per cent, though once adjusted for the effects of inflation, last month’s year-on-year decline was a more modest 0.2 per cent. It follows negative sales outcomes for June and July.
Advertisement
Hide AdAdvertisement
Hide AdSRC director David Lonsdale said Scottish retailers had suffered a “hat-trick” of falling sales figures during the three months of this summer as August sales dipped below the previous year’s performance. The relatively small 0.2 per cent fall in real terms marked an improvement on July, he noted, “giving hope things might pick up as trading moves into the autumn”.


Lonsdale said: “Back to school sales were disappointing as consumers looked to save by switching to pre-loved items, an area retailers are increasingly involved in. Food sales were flat, but against very strong figures from last year when inflation was running hot, indicating grocers may have to adapt to more normal conditions.
“Unfortunately, whilst trading is stagnant, new government initiatives remain a concerning growth area. This week’s Programme for Government will be a test to see if Scottish ministers are paying attention to the travails of the business community, who are already grappling with the implications of the new UK administration’s legislative programme. If there are further significant or unreasonable regulatory burdens announced then industry will question whether the government is truly focused on Scotland’s economic recovery.”
According to the latest retail sales monitor, total food sales fell by 0.3 per cent last month, versus August 2023, when they had increased by 8.6 per cent, likely fuelled by higher rates of inflation. Total non-food sales were down 0.7 per cent year on year in August. Adjusted for the estimated effect of online trading, total non-food sales fell by 0.3 per cent, compared with a year earlier.
Advertisement
Hide AdAdvertisement
Hide AdLinda Ellett, UK head of consumer, retail and leisure at KPMG, which helps to produce the monthly sales monitor, said: “Despite summer finally making an appearance, and a slight uptick in consumer confidence, shoppers did not catch-up their spending during August, with a slight dip in sales growth reflecting the challenging retail environment that is likely to dominate for the rest of this year.


“Consumer sentiment is gradually starting to improve, but there still remains some nervousness around potential tax rises and the cost of putting the heating back on when the cooler weather arrives. The fragile nature of consumer confidence means shoppers will continue to be driven by price and value, moving from brand to brand to find the best price benefit and we are likely to see retailers using promotional activity to seek to win at this.”
She added: “Retailers looking to seize on slowly returning consumer confidence will need to demonstrate best value for money, as well as tap into the ‘experience’ factor as consumers focus their discretionary spend on having fun or experiences over owning more ‘stuff’.”
First Minister John Swinney is expected to address the Scottish Parliament on Wednesday as he unveils his first Programme for Government. He has already warned there are “tough decisions” ahead on the public finances as the Scottish Government attempts to close a budget gap. Swinney has pledged plans to grow the economy, deliver net zero and eradicate child poverty despite the “challenging financial backdrop”.
Advertisement
Hide AdAdvertisement
Hide AdCBI Scotland is calling on ministers to use the Programme for Government to support enterprise and “go full throttle” in a bid to stimulate long-term sustainable growth. In a letter to the First Minister ahead of this week’s set piece, the business organisation is urging the Scottish Government to prioritise policy competitiveness and policy stability, boost business investment, and “seize on the amazing opportunities available to Scottish businesses both at home and abroad”, particularly in areas such as the green economy where, the CBI argues, “Scotland already boasts a sizeable early mover advantage”.
Mags Simpson, interim CBI Scotland director, said there was “a real chance to reset the relationship between Holyrood and Westminster” as she called for “collaboration not confrontation”.
Simpson said: “The two governments must now work hand-in-glove to break-down barriers to growth, crowd-in business investment, and build a high-skilled workforce. Giving certainty to investors is essential if we’re to capitalise on the amazing opportunities available to us.
“A thriving green economy is within our grasp, but we need to address the issues that are giving investors pause for thought. That means publishing long awaited net-zero strategies, addressing critical gaps in skills and infrastructure and cutting through burdensome red tape – particularly around planning.
Advertisement
Hide AdAdvertisement
Hide Ad“We also need to take stock of Scotland’s competitiveness, not just internationally but across the UK. In a fierce race for talent, it’s time to put business leaders’ minds at ease by committing not to widen the income tax gap between Scotland and the rest of the UK. We should also look closely at whether current income tax bands are helping or harming the Scottish economy overall.”
Meanwhile, Scotland’s salmon sector has urged the First Minister to prioritise growth and job creation in this week’s Programme for Government. Salmon Scotland, the trade body representing the country’s largest food export, is calling on Swinney to “cut the red tape hindering Scotland’s blue economy”.
Comments
Want to join the conversation? Please or to comment on this article.