In September, retail sales in Scotland outperformed the rest of the UK, particularly in the fashion and clothing sector. The Scottish Retail Consortium’s latest report, in collaboration with KPMG, reveals that Scottish consumers are still spending cautiously, prioritizing essential items. However, the fashion industry experienced notable growth, as customers stocked up on autumn wardrobe essentials.

One of the key factors contributing to the success of the fashion sector in Scotland is the comparatively cooler weather in the region compared to England and Wales. This motivated customers to update their wardrobes and prepare for the autumn season. While this is positive news for Scottish retailers, the report also highlights the upcoming holiday season as a critical period that could make or break the industry’s performance.

In the five weeks leading up to September 30th, total sales in Scotland increased by 6.1% compared to the same period last year. Although slightly lower than the 6.5% growth recorded in September 2019, it still surpasses the three-month average growth of 5.5%. However, when adjusted for inflation, there was a slight decline of 0.1% compared to the previous year.

Non-food sales also witnessed growth, with a 3.5% increase in September compared to the same month in 2019. This figure exceeds the three-month average growth of 2.6%, but falls below the 12-month average of 5.1%. When adjusted for the estimated effect of online sales, total non-food sales increased by 1.9%, compared to a 3% rise in the previous year.

Ewan MacDonald Russell, Head of Policy & External Affairs at the Scottish Retail Consortium, views these numbers as positive indicators for the Scottish retail industry despite consumers’ cautious spending habits. He recognizes the impact of the weather on the fashion sector’s performance and notes that shoppers are still more inclined to purchase discounted items rather than paying full price. However, larger furniture and electrical products faced challenges due to depressed consumer confidence.

Looking into the future, retailers in Scotland are expected to face challenging trading conditions in the coming months. Higher winter energy bills and existing expenses may limit households’ spending power. Maintaining sales volumes without resorting to early discounting will be a significant challenge for retailers, and the Scottish Retail Consortium suggests that the government should avoid measures that further impact the spending power of modest and less affluent households.

Paul Martin, Partner and UK Head of Retail at KPMG, highlights the ongoing impact of inflation on sales and the resilience of the retail industry as a whole. He notes a growing divide between strong and weak players on the high street, which will intensify competition for Christmas shoppers. Early promotions and competitive pricing will be crucial in attracting customers focused on securing the best deals within tight household budgets.

Useful links:
1. Scottish Retail, Food & Drink Awards
2. KPMG Retail Insights