High street sales show modest January rebound but are still ‘deeply fragile’

By Simon Warburton

February 15 2023, 12:01 am

Inverness High Street. Image: Jason Hedges.

Inverness Bid has cautiously welcomed data showing retail sales in Scotland increased in January but the figures nonetheless show a “deeply fragile” recovery.

The January sales helped retail sales to increase 8.9% compared with January 2022, new research indicates.

However the Scottish Retail Consortium (SRC) latest retail sales monitor, produced with KPMG, said once inflation is accounted for Scotland recorded a 1% growth compared to January 2022.

Warm clothing was among the top sellers but warned consumer spending continues to be cautious.

Inverness Bid director Lorraine Bremner McBride. Image: Inverness Bid.

Retailers still face pressure

Inverness BID director Lorraine Bremner McBride welcomed confirmation of the rise in sales but noted retailers in Inverness continued to face pressures and would need support.

She said: “The SRC data comparing national sales in January this year across a number of sectors indicates there has been some improvement versus January 2022.

“However, this is against a backdrop of reduced sales overall.

“Our members still face a number of economic and other pressures and given overall many non-domestic rateable values in retail for example have reduced in the city centre – supporting locally based enterprise where at all possible remains vitally important to our local economy at a critical time.”

SRC deputy head Ewan MacDonald-Russell warned governments against raising costs for retailers in coming weeks. Image: SRC

SRC deputy head Ewan MacDonald Russell noted any retail recovery was “deeply fragile” adding: “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 government need to keep consumer incomes at the heart of their plans in the coming weeks.

Any plans which increase the cost of living for the near future need ditching”

SRC deputy head Ewan MacDonald Russell

“It should be obvious any plans which increase the cost of living for the near future need ditching if they don’t want to quell any economic recovery before it comes entrenched.”

For his part KPMG UK head of retail Paul Martin said despite January typically being a low-spending month, Scotland did see real terms sales growth giving the sector “cause for hope.”

KPMG partner Paul Martin — KPMG UK head of retail Paul Martin said the ‘tightrope’ for retailers was ensuring affordability for customers while their own costs rise. Image: KPMG.

Food sales rise

Mr Martin added: “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 behaviour 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.”

The SRC retail sales monitor, produced with KPMG, found total retail sales last month increased by 8.9% compared with January 2022.

Food sales rose by 11.3% in the same period and non-food sales by 6.9%.

Data show the January rise was below the three-month average increase of 9.5% and the 12-month average growth of 12.2%.