Retailers brace for tough festive trading season

Scottish retailers are facing possibly their toughest festive season in a decade amid high inflation and skyrocketing costs, a report has found.

The Scottish Retail Consortium (SRC) reported total sales rose last month by 6.3%, compared with October 2021.

However, adjusted for inflation, the year-on-year change was -0.3%.

Experts said sales volumes in most categories, both online and in store, fell as consumers adjusted to shrinking household incomes.

Without taking inflation into account, total food sales increased by 10.9% in October, while non-food sales saw an increase of 2.4%.

SRC said food sales volumes continued to fall, creating a “knock-on effect” on more discretionary retail spending.

The consortium found purchases of energy-saving items, such as air fryers for cooking and blankets, held up well.

But clothing sales in particular were poor, turning in the weakest performance since February, with customers failing to refresh autumn wardrobes.

Donald Nairn has run Toys Galore in Edinburgh’s Morningside for the last 17 years.

He feels the shop has been more resilient than most against soaring inflation – which rose to 10.1% in September and is expected to increase again.

Nevertheless, Mr Nairn feels the current squeeze is worse than the financial crash of 2008.

And while people will always buy toys for children, he said, spending habits were likely to change significantly this Christmas.

“If prices are going up and people have less money, then they’re buying fewer toys,” he said.

“They might decide at Christmas, instead of spending £100 they’ll spend £60 and they’ll just buy smaller toys. Kids might not get multiple toys, they’ll get one toy.”

According to Mr Nairn, the shop is still a draw for children who come in to browse at the weekends.

But in order to keep pocket-money items priced affordably, the business owner has had to change his habits.

He said: “Because a lot of it is coming from the far east, the weakness of the pound has basically meant the cost of a lot of these items has gone up substantially to the point where they’re no longer pocket money.

“What we’ve had to do is buy in much larger quantities. So instead of buying 24 whoopie cushions we buy 300 because then you get a much lower price.

“Bulk buying is a bit of a nuisance, it’s not the way I’d like to do business but it’s necessary to keep costs down.”

KPMG’s head of retail, Paul Martin, said retailers were “facing possibly their toughest festive season in a decade as shoppers look to trade down, search out bargains and purchase less to meet the economic challenges ahead”.

He said: “The bottom line is that consumers are buying fewer products per shop.

“Retailers will be hedging their bets on upcoming events such as the World Cup and Black Friday to boost sales during the crucial golden quarter.”

SRC director David Lonsdale said retailers would be disappointed not to have seen any surge in sales either for Halloween or early Christmas-related trading.

He added: “Weak trading is a huge concern for retailers who have suffered two successive poor Christmases.

“With costs skyrocketing, the pressure is building on retailers to deliver a good performance.”