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No return to growth as recovery stalls

No return to growth as recovery stalls

SRC-KPMG SCOTTISH RETAIL SALES MONITOR – AUGUST 2020

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Overall, sales stagnated in August and remained in a broadly similar level of decline as that seen in July. On a Total basis, the rate of decline stood at 7.5% year on year, up slightly from July’s 8.3%. Food sales significantly slowed during the month, albeit remaining in positive territory, with growth of 1.5% the lowest of the coronavirus period – excluding the effects of Easter in April 2019, which heavily distorted this April’s figure. Non-Food on the other hand continued its recovery in August, with an Online-adjusted decline of 1.7%. There were conflicting forces at play for Non-Food, as wet weather boosted sales of autumn’s clothing ranges, but this was in part counterbalanced by the lack of tourism – particularly for Edinburgh that lacked the Fringe.

August was a mostly unsettled month but there was a spell of warm or hot and sunny weather with some thundery outbreaks from the 6th to mid-month, especially in western areas, though eastern counties were more affected by low cloud. It was often wet and windy from the 19th onwards, but the north-west and Northern Isles mostly missed the rain. Averaged across the country, mean temperature, sunshine and rainfall were all near normal.

Covering the four weeks 2-29 August 2020

  • Total sales in Scotland decreased by 7.5% compared with August 2019, when they had decreased by 0.5%*. This was above the 3m average decline of 12.0% and the 12m average decline of 9.5%. Adjusted for deflation, the decrease was 5.9%.
  • In August, Scottish sales decreased by 8.9% on a like-for-like basis compared with August 2019, when they had decreased by 1.0%*. This is above the 3-month average decrease of 10.6% but below the 12-month average decrease of 8.5%.
  • Total Food sales increased 1.5% versus August 2019, when they had increased by 2.7%*. This is the lowest since June 2019, below the 3-month average growth of 3.1% and the 12-month average growth of 3.2%. The 3-month average was below the UK level of 5.9%, while the 12-month average was below the UK’s levels of 3.4%.
  • Total Non-Food sales decreased by 15.1% in August compared to August 2019, when they had decreased by 3.2%*. This was above the 3-month average decline of 24.6% and the 12-month average decline of 20.0%.
  • Adjusted for the estimated effect of Online sales, Total Non-Food sales decreased by 1.7% in August versus August 2019, when they had decreased by 2.4%*. This is above the 3-month average decline of 9.6% and the 12-month average decline of 12.5%. Those are lower than the UK’s 3m average growth of 1.4% and 12m Total average decline of 5.8% respectively.

* Note 2020 is a 53-week year in the ONS calendar: as a result of the extra week in January 2020, the comparable 2019 performances cited here may differ from those published last year, due to the one-week shift in the comparison.

Paul Martin, Head of Retail at KPMG UK, said:

“August’s figures reinforce the overwhelming challenges facing Scotland’s High Streets. With total year-on-year sales down 7.5%, the situation is improving, but incredibly modestly. An ongoing lack of consumer confidence, combined with local lockdowns, and a massive decline in summer tourism numbers have in summary created arguably the most difficult period Scotland’s retail sector has witnessed in modern times.

“All eyes will now be on the Autumn period. As Coronavirus cases rise and the furloughing of staff eases off, there are real fears the industry could face even greater challenges ahead. The focus now will be on restoring confidence, working collaboratively as a sector to drive up footfall, and reducing costs as much as possible, in the hope that we’ll see a more rapid return to growth towards the end of the year.”

David Lonsdale, Director  at the Scottish Retail Consortium, commented:

“Six months on from the start of the pandemic and the revival of retail is proving painfully slow and protracted. The recovery in stores witnessed over recent months petered out in August, with Scottish retail sales now having fallen for six months in a row compared to the same period last year. Any hopes of a return to growth, or even better a modest claw back of lost sales from the earlier part of the pandemic, will have been thwarted by this latest data.

“Not all parts of the industry have been impacted equally. Non-food categories continued to recover, buoyed by online purchases and sales of larger household goods such as sofas, beds, white goods and TVs. More modestly priced homeware items did well too. Computing continued its strong run driven by the return of students and remote working. Grocery sales nudged up but recorded its weakest performance in over a year, as eating out resumed. Clothing and footwear underperformed yet again, even accounting for back to school items, as did beauty and cosmetics. That said, gifting items lifted during the month, an indication of early festive purchasing.

“The past six months have been bruising for the industry, and even with the crucial Christmas trading period coming in to view the near term outlook remains uncertain. Much of the industry continues to suffer from a protracted weakness in demand, particularly those more reliant on the hustle and bustle of high footfall locations in our city centres and shopping malls.”

-ENDS-

Notes to Editors:

For media queries, please contact:

Brian O’Neill, Corporate Communications Manager                                                                            

T: 07823 668 689                                                                                                                                 

E: Brian.O’Neill@kpmg.co.uk  

 

About the Scottish Retail Consortium                                                                                                                          

The Scottish Retail Consortium (SRC) is Scotland’s leading retail trade association. It represents the full range of retailers, large and small, multiples and independents, food and non-food, online and store based.

About KPMG in the UK                                                                                                                            

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