'Bleak' figures show 'meagre' retail sales as customers cut back amid cost of living crisis

Retail sales in Scotland recorded a “meagre” growth of 1.6% in May compared to the same four weeks last year.

After being adjusted for inflation the numbers represent a decrease of 1.1% compared to 2021 when sales had grown by 60.9%.

The “bleak” figures come as customers cut back on spending amid a cost of living crisis and both the UK and Scottish Governments have been urged to “keep a close eye” on the situation and be ready to act if if continues.

The 1.6% increase for 2022 is below the three month and the 12-month average increases of 18.9% and 18.5% respectively.

Both the May SPI (BRC) and April CPI (ONS) show inflation running at historically high levels, meaning a portion of the sales growth will be a reflection of rising prices rather than increased volumes.

Total sales in Scotland increased by 1.6% compared with May 2021, when they had grown by 60.9% and total Food sales increased by 1.8% versus May 2021, when they had decreased by 1.1%.

May was above the three-month average of 0.0% and the 12-month average growth of 0.1%.

The three-month average was above the UK level of -0.7%.

Total Non-Food sales increased by 1.5% in May compared with May 2021, when they had increased by 112.9%.

This was also below the three-month average increase of 34.8% and the 12-month average of 33.9%.

Adjusted for the estimated effect of online sales, total non-food sales decreased by 2.6% in May versus May 2021, when they had increased by 109.5%.

Ewan MacDonald-Russell, head of policy and external affairs at the Scottish Retail Consortium said: “The bleak economic news translated into meagre Scottish retail sales as customers cut back on spending in May.

“In real terms sales fell by 1.1 percent compared to 2021 with consumers responding to the cost-of-living crisis by reigning in their spending or trading down.

“Food fell by 2.5 percent in real terms as feeble sales were significantly offset by higher input costs; exacerbated by the conflict in Ukraine.

“Non-food sales were similarly weak, with white goods and homeware especially poor, albeit fashion was bolstered by sales of formalwear as people started to attend weddings and similar events after a three-year hiatus.

“Retailers are facing the difficult truth that their customers are becoming more price conscious in response to high inflation.

“Those customers are responding by reducing their discretionary spending, both by buying fewer items but also trading down from premium to value ranges.

“Government at both Holyrood and Westminster need to keep a close eye over the coming months and stand ready to take action if the situation doesn’t resolve itself soon.”

Paul Martin, Partner, UK head of retail at KPMG said: “The sun didn’t shine for long during May, and clouds remain for Scottish retailers after a less than convincing May saw sales growth stall for the second month running.

“The rising cost of living is still top of the agenda for retailers, with consumer confidence a key factor to watch out for. Retailers will be hoping that warmer weather and a summer feel-good factor kick builds confidence amongst some shoppers as presently overall confidence levels are lower than sales may suggest.

“It also remains to be seen what effect the Chancellor’s recent announcement to provide a universal discount on energy bills will do to confidence levels, as consumers continue to make difficult choices about how to spend their money.

“Cost and efficiency are still top of agenda for most operators, and crucially, understanding how they can protect their margins whilst remaining price competitive for consumers.”