The ‘harsh truth’ facing Scotland’s retailers as high street spending stalls

Retailers are facing “increasingly unpalatable choices” as cash-strapped Scots rein in spending, industry leaders have warned.

New figures from the Scottish Retail Consortium (SRC) reveal a lacklustre performance last month, despite strong food sales in the opening half of July as consumers fired up their barbecues amid the sunny weather.

The trade body’s latest retail sales monitor shows that total sales north of the Border nudged up 0.1 per cent last month, compared with July 2024. However, adjusted for the effects of inflation, there was a year-on-year fall of 0.5 per cent - a slight improvement on June’s result.

The outlook for many town centres and retailers heading into autumn is rather bleak.

Ewan MacDonald-Russell, deputy head of the SRC, said: “July was a lacklustre month for Scottish retailers as sales again disappointed.

“The harsh truth is Scots are holding back spending as worries about the economy grow. That is leaving shops in the lurch - facing higher costs as a consequence of last year’s UK government Budget without the growth needed to pay those bills.

“With little sight the economic weather will brighten many retailers, especially those on the high street, face increasingly unpalatable choices in the coming months.”

A breakdown of the latest data shows that total food sales decreased by 1.4 per cent, compared with July 2024. Non-food sales, overall, increased by 1.4 per cent, year on year. Adjusted for the effect of online sales, non-food takings were 1.6 per cent higher.

Linda Ellett, UK head of consumer, retail and leisure at KPMG, which helps compile the monthly data, said: “The UK’s fifth warmest July on Met Office record brought a boost to home appliance and food and drink sales. But rising inflation was also a driver of the latter and monthly non-food sales are only growing at around 1 per cent on average at present.

“With employment costs having risen and inflation both a business and consumer side pressure, it remains a challenging trading environment for many retailers.

“While the majority of consumers that KPMG surveys are confident in their ability to balance their monthly household budgets, big ticket purchases are more considered in the context of rising essential costs and ongoing caution about the economy and labour market. Holidays are the priority for many this summer but those heading away have had to account for a higher cost of travel.”

The testing conditions on the high street come as the British Independent Retailers Association (Bira) calls for “urgent government action” as River Island and Hobbycraft announce restructuring plans, and Claire’s UK business collapses into administration.

It points to a string of major retailers announcing significant restructuring plans, store closures and job cuts amid rising costs and weak consumer demand and high street footfall.

Andrew Goodacre, chief executive of Bira, said: “It’s deeply saddening to see long-standing high street chains announcing significant profit reductions and facing existential threats. These developments provide yet more examples, if they were needed, of the urgent need to support high street businesses across Britain.

“What we're witnessing is further evidence of persistently low consumer demand and reduced discretionary spending.”

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