Fears over future of stores as sales still way adrift of pre-covid levels
A WARNING over the future of physical retail stores in Scotland has been sounded as industry figures published today underline the continuing challenges facing the sector, with sales in the non-food category remaining way adrift of pre-pandemic levels.
The Scottish Retail Consortium, unveiling its latest survey, focused on a 13.8 per cent drop in the total value of sales north of the Border between March 2019 and last month.
Noting the year-on-year comparison for last month was against the “beginning of the coronavirus crisis period in March 2020”, the SRC said: “The comparable conditions from last year are not a representative basis point. Therefore, the headline rates in this report are calculated comparing this month’s performance against the same month from 2019.”
The SRC did note a “big step in the right direction” in the latest figures, with the total value of retail sales in Scotland in February having been down by 23.7% on the same month of 2019.
However, it also observed that “sales remained in significant decline due to the ongoing closure of all non-essential stores”.
Scottish retail sales value was last month down by 6.6% on March 2020.
The latest figures underline the continuing contrast between the performances of the grocery and non-food sub-sectors. The non-food category tends to reflect more discretionary elements of spending.
Food sales value last month was down by 1.7% on March 2020 but this drop reflected the impact of stockpiling at the start of the pandemic. And food sales value was sharply higher this March than in the same month of 2019.
Non-food sales value in March was down 10.6% on the same month of 2020.
The SRC said: “While food sales for the month were below the levels seen during the stockpiling episode last March, they were still above the more normal levels seen in 2019, due to the lack of competition from pubs and restaurants that remained closed.
“The non-food side recovered significantly, but remained some way behind normal spending levels, which was a natural result of the store closures.”
First Minister Nicola Sturgeon confirmed yesterday that non-essential stores in Scotland can reopen on April 26.
Ewan Macdonald-russell, head of policy and external affairs at the SRC, said: “The decline in retail sales in March was much less steep compared to recent months, albeit still fell by nearly 14% compared with the truer comparable trading period in 2019. It’s hardly surprising sales were down with most shops shut for the crucial run-up to Easter, but there were some encouraging signs that shoppers are preparing to resume shopping when the lockdowns finally end.”
Contemplating the outlook, he added: “As we move further into the year the two big questions will be whether retail sales bounce back due to pent-up demand with the end of lockdown, and where that uplift in retail sales is sustained rather than merely temporary.
“So far this year the majority of non-food sales have taken place online – if that doesn’t change and people don’t return to the shops it will pose very significant questions for the future of physical retail stores, and in turn for the state of our retail destinations, local communities and tax revenues from business rates. That’s something politicians of all parties will have to grapple with once the current election is over.”
Paul Martin, UK head of retail at accountancy firm and survey sponsor KPMG, said: “March 2020 was a month that we’re unlikely to ever experience again, with panic buying followed by store closures and a collapse in sales. With that in mind, our comparison on a two-yearly basis provides us with more of an accurate idea of how well Scotland’s high street is performing. With total sales down almost 14%, it’s clear that there is a long and potentially very challenging road ahead. However, it’s reassuring to note that this is a significant improvement from the 23.7% decline in February. The next few months will be make or break for many retailers as restrictions ease and consumer confidence hopefully returns.”
He added: “There may be light at the end of the tunnel but any recovery and potential post-pandemic boom period could be too little, too late for some.”
If that doesn’t change, it will pose very significant questions for the future of physical retail