Retailers 'walking a fine line' over whether to pass on price rises

Retailers are “walking a fine line” between protecting margins and further denting consumer confidence by passing on price rises, it has been claimed.

Its despite Scottish retail seeing an increase in sales, as the sector recovers from the coronavirus pandemic.

The cost-of-living, however, is still a cause for concern among consumers across the UK, with household spending tightening.

According to the latest figures published by the Scottish Retail Consortium (SRC), sales went up by 4.4% compared with June last year.

However, it is below the three-month and 12-month average increases of 6.9% and 15.2% respectively.

On a like-for-like basis, Scottish sales this year went up by 3.3% compared with June 2021, when they had increased by 34.2%.

Meanwhile, total food sales increased by 2.7% versus this time last year, when they increased by 1.4%.

All non-food sales went up by 5.8% in June compared with June 2021, when they rose by 69.9%.

David Lonsdale, director of the SRC, said figures from June last year were high because they were compared with June 2020 when most shops except “essential” ones were closed, with many “non-essential” shops unable to open between the national lockdown beginning in March and June 29 2020.

Paul Martin, UK head of retail at KPMG, said that annual sales improved compared to June last year

However, he explained that due to inflation, any growth is “paltry” and “doesn’t signify any true shift in gear for the Scottish economy”.

“As the cost of living crisis continues to deepen, retailers face walking a fine line between protecting margins and further denting consumer confidence by passing on price rises whilst negotiating with their suppliers to share the cost increases.” he said.

“Cost and efficiency will dominate retailers’ agendas as they are forced to make some tough decisions on which products make it to the shelves in order to remain price competitive for consumers.

“With warmer summer weather predicted, and many consumers choosing to holiday at home this year, retailers will be hoping that the feel-good factor begins to improve confidence amongst some shoppers – as presently overall confidence levels are lower than sales may suggest.”