Scots retail sales flatline in September ahead of potential 'battle' for key festive trade

Scotland’s retail sector saw sales stall in September ahead of what could prove of the most critical “golden quarter” holiday periods in recent memory, with a potential “intense battle” among shops for festive spend, according to a new report.

The SCR says trading is likely to remain very challenging in the coming months as households grapple with higher winter energy bills (file image). Picture: John Devlin.

The Scottish Retail Consortium (SRC) and professional services giant KPMG have revealed their latest sales monitor showing that total sales in Scotland last month fell by 0.1 per cent year on year, adjusted for inflation, as customers focused on necessities, but the pace of decline slowed from the 1.3 per cent drop seen in August.

The period, spanning August 27 to September 30, saw sales on a non-adjusted basis jump by 6.1 per cent, down from the 6.5 per cent rise seen 12 months previously. Total food sales were up by 9.2 per cent from September 2022, when they had grown by 9.6 per cent. Total non-food sales, adjusted for the estimated effect of online sales, increased by 1.9 per cent year on year from 3 per cent.

Ewan MacDonald Russell, the SRC’s head of policy and external affairs, said: “Scottish retail sales were essentially flat in real terms in September as cautious customers continued to focus on necessities. Nonetheless, this was a better picture than elsewhere in the United Kingdom, driven in part by more seasonable weather. Grocery sales did well with customers seeming to prefer to cook hearty meals at home rather than venture out into the dreich weather; indeed food sales were up in real terms despite food inflation slowing.

“Fashion and clothing did better than in recent months, with customers stocking up their autumnal wardrobes. However, retailers continue to find shoppers are reluctant to purchase full-price products, instead only buying when the right discounts are available. Similarly with consumer confidence still heavily depressed larger or high-value furniture and electrical products performed poorly.

“Trading is likely to remain very challenging in the coming months as households grapple with higher winter energy bills alongside their existing outgoings. For retailers, the challenge will be trying to maintain sales volumes without succumbing to the temptation to start discounting stock too early ahead of Christmas. Government can help by looking to rule out at the earliest opportunities any further measures which will hit the spending power of modest and less affluent Scottish households.”

Paul Martin, partner, UK head of retail at KPMG, praised sales rising to 6.1 per cent from 5.6 per cent in August. However, he added: “Despite the growth, sales are still being dented by inflationary pressure, and after years of battling adversity, the resilience of the retail industry is being tested. We're seeing a growing divide between the strongest and weakest players on the high street, making the impending battle for Christmas shoppers likely to be very intense this year.

"We are already seeing early and abundant promotions aimed at loosening tight household budgets, and consumers are focused on securing the best deals, with pricing playing a pivotal role in purchasing decisions. This upcoming holiday season may prove to be one of the most critical 'golden quarters' in recent memory, as the fate of many in the sector hangs in the balance."