Tax troubles round corner for Scottish retailers and shoppers as store takings wane

Scottish retail industry leaders have warned of tough times ahead amid a volley of tax hikes after a lacklustre sales performance last month.

Releasing its latest sales monitor, the Scottish Retail Consortium (SRC) said total sales by value fell by 0.4 per cent in February, compared with the same month last year. This was below the three-month average increase of 0.7 per cent but, adjusted for the effects of inflation, there was a year-on-year increase last month of 0.3 per cent.

The SRC noted that Valentine’s Day had provided a lift to sales of jewellery, fragrances and chocolates. However, purchases of toys and baby equipment fell back, as did clothing and footwear, as the cold weather deterred shoppers from buying new spring and summer fashions.

The SRC said poor weather may have deterred shoppers from buying new spring and summer fashions.

David Lonsdale, director of the SRC, said: “The total value of Scottish retail sales nudged down in February compared to the year before, albeit in real-terms - once adjusted for falling shop prices - they recorded a third successive month of growth.

“With soaring council tax and water bills just around the corner, and more than enough geo-political uncertainty abound, it remains to be seen how all of this impacts shoppers’ propensity to spend.

“What isn’t in doubt is the imposition of government-mandated tax rises from next month, from UK, Scottish and local administrations, which will shackle customers and retailers with substantial extra costs. That will serve to make trading even tougher for Scotland’s retailers.”

The new figures showed that total food sales north of the Border increased by 0.7 per cent compared with February 2024, when they had risen 3 per cent. Overall non-food sales were down 1.3 per cent compared with last February, when they had increased by 0.1 per cent. Adjusted for the effects of online trading, non-food sales fell 0.6 per cent, year on year.

Linda Ellett, UK head of consumer, retail and leisure at KPMG, which helps produce the monthly sales monitor, said: “Scottish retail sales fell slightly in February, as consumers remained cautious with their spending. Many are continuing to prioritise saving, travel and experiences, with nervousness about the economy deferring other big ticket purchasing.

“As we have seen already this year, retailers are increasingly reflecting upon online and in-store sales data, considering the implications of the recently announced employment cost rises and business rates pressure, and scrutinising where best to be located,” she added. “Online shopping and the growth of social commerce has contributed to a lowering of demand for some physical retail stores and boardrooms will continue to keep a close eye on monthly footfall and sales data as 2025 progresses.”

The monitor also showed that sales were flat on a like-for-like basis - which strip out new store openings, closures and changes in selling space, compared with a year earlier, when they had nudged up by 0.7 per cent. This was below the three-month average increase of 1.1 per cent but above the 12-month average decrease of 0.3 per cent.

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