Covid in Scotland: 'No recovery in sight' for retailers

Scottish retailers have warned that there is "no recovery in sight" after reporting a sharp fall in high street sales.

New figures from the Scottish Retail Consortium (SRC) found a 6% year-on-year drop in total sales in September.

Food sales were up by 3.7%, but the non-food category plummeted by 14.2%.

SRC described the latest figures as "a huge concern to the industry" as the crucial Christmas trading period approaches.

It found that white goods, household essentials, and electronics continued to perform well, with televisions and gaming boosted by new releases.

However, fashion, footwear and beauty products continued to perform poorly, with "customers only buying necessary rather than indulgent products".

SRC head of policy Ewan MacDonald-Russell said: "Overall, the Scottish retail industry is in fragile condition heading into the golden trading quarter.

"There are severe headwinds ahead. Whilst shops can continue to trade, the lockdown of hospitality businesses removes reasons to visit town and city centres."

KPMG's UK head of retail, Paul Martin, said that while the September figures painted a "slightly less bleak picture" for Scotland's high streets, the challenges facing retailers showed little sign of abating.

"Shoppers are certainly being less impulsive and far more targeted with how and where they choose to buy goods, given current uncertainties and economic concerns," he added.

Meanwhile, new research by the Institute for Fiscal Studies (IFS) has suggested that food price inflation subsided over the summer as retailers returned to price competition and discounting.

The IFS found grocery prices gradually fell towards pre-pandemic levels following a 2.5% rise at the beginning of lockdown.

By the first week of August, the price level for groceries was about 0.5% higher than it was at the beginning of the year.

The report also indicated a 70% increase in the share of groceries bought online for the four weeks up to 9 August, compared with the same period in 2019.

It also found that an initial 8% reduction in the range of grocery products bought - which occurred in March - has persisted, suggesting an ongoing reduction in consumer choice.

IFS deputy research director Martin O'Connell said: "The sharp increase in the price of groceries at the start of lockdown was largely reversed by the beginning of August.

"This was driven by retailers cutting back on promotions at the onset of lockdown, and then the prevalence of price, though not quantity, promotions gradually returning to normal levels.

"As cases of Covid-19 are now rising and restrictions reintroduced, it remains to be seen whether another bout of grocery inflation will follow."