Scots shoppers snap up clothing in January sales but high street recovery 'deeply fragile'

Scottish retailers notched up further sales gains last month but the recovery is “deeply fragile”, industry leaders today warned.

Releasing its latest sales monitor, the Scottish Retail Consortium (SRC) said total sales grew by 1 per cent in January once prices had been adjusted for inflation, which is currently running at an annual rate of about 10 per cent. Total non-food sales increased by 6.9 per cent last month, a more muted rise than the one recorded in December.

Ewan MacDonald Russell, deputy head of the SRC, said: “Scottish retail sales stayed positive as the fragile recovery continued; with a real-terms increase of 1 per cent in January. Grocers saw sales boosted by Hogmanay and Burns Night celebrations, as customers took advantage of the first real opportunity after the pandemic to enjoy these events more normally. On the high street, the January sales attracted customers back into shops to take advantage of some heavily discounted products.”

He noted that warm clothing products had performed well, but there was also evidence consumers took advantage of the sales to pick up non-seasonal items as they looked ahead for spring and summer breaks.

“Nonetheless, there is a clear sense any retail recovery is deeply fragile,” warned MacDonald Russell. “Consumers continue to be cautious with their spending, and any increase in their costs is likely to be felt in reduced shop takings. With that in mind local and national governments need to keep consumer incomes at the heart of their plans in the coming weeks. It should be obvious that any plans which increase the cost of living for the near future need to be ditched if they don’t want to quell any economic recovery before it comes entrenched.”

The latest data showed that total food sales rose by 11.3 per cent last month, compared with the year before. Adjusted for the estimated effect of online sales, total non-food sales increased by 5.4 per cent, year on year. That was below the three-month average growth rate of 6.7 per cent and the 12-month average of 11.7 per cent.

Paul Martin, partner and UK head of retail at KPMG, which helps to produce the monthly sales monitor, said: “During what is typically a low spending month, Scotland did see real terms sales growth in January, giving the sector cause for hope despite the challenging short-term outlook. Despite the cost-of-living crisis putting pressure on Scots, money was still spent online and at the tills last month. Consumer spending patterns and behaviours have shifted to focus more on essentials, and with the latest interest rate rise and utility price increases on the horizon, shrinking household incomes means we will continue to see a shift in what consumers buy and where they buy from.

“Retailers are facing a tightrope. As their costs rise and margins are squeezed, they also have to ensure affordability and value for customers. Although many have demonstrated resilience over recent years, it is likely we will continue to see casualties both online and on the high street this year.”

Recent high street casualties have included M&Co and Paperchase.