Retail sales fell last month as tax rises loom, says industry body

Spending on shopping fell last month as people attempted to save and anticipated tax hikes, according to an industry body.

The Scottish Retail Consortium said sales were “muted” ahead of tax increases in April, with “soaring council tax and water bills just around the corner”, and it also cited “geo-political uncertainty”.

Data covering the four weeks from February 2 until March 1 showed sales in Scotland decreased by 0.4% compared with February 2024, when they had increased by 1.4% – below the three-month average increase of 0.7% and above the 12-month average decrease of 0.6%.

Adjusted for inflation, there was a year-on-year increase of 0.3%.

Total food sales increased by 0.7% compared with February 2024, when they had increased by 3.0%. This was below the three-month average increase of 1.1% and above the 12-month average increase of 0.3%.

Non-food sales decreased by 1.3% compared with February 2024, when they had increased by 0.1%. This was below the three-month average increase of 0.4% and above the 12-month average decrease of 1.3%.

Adjusted for the effect of online sales, non-food sales last month decreased by 0.6% compared with February 2024, when they had decreased by 1.8%. This was below the three-month average increase of 2.6% and above the 12-month average decrease of 1.2%.

Many are continuing to prioritise saving, travel and experiences, with nervousness about the economy deferring other big ticket purchasing

David Lonsdale, director of the Scottish Retail Consortium, said: “The total value of Scottish retail sales nudged down in February compared to the year before, albeit in real-terms – once adjusted for falling shop prices – they recorded a third successive month of growth.

“This was a more muted set of results and reflected the fall in shopper footfall which faded during February.

“Computing and furniture did well and grocery continued to grow. Valentine’s Day gave a lift to sales of jewellery, fragrances and chocolates.

“Purchases of toys and baby equipment however fell back, as did clothing and footwear, as the cold weather deterred shoppers from buying new spring and summer ranges.

“With soaring council tax and water bills just around the corner, and more than enough geo-political uncertainty abound, it remains to be seen how all of this impacts shoppers’ propensity to spend.

“What isn’t in doubt is the imposition of government-mandated tax rises from next month, from UK, Scottish and local administrations, will shackle customers and retailers with substantial extra costs. That will serve to make trading even tougher for Scotland’s retailers.”

Linda Ellett, UK head of consumer, retail and leisure at KPMG, said: “Scottish retail sales fell slightly in February, as consumers remained cautious with their spending.

“Many are continuing to prioritise saving, travel and experiences, with nervousness about the economy deferring other big ticket purchasing.

“As we have seen already this year, retailers are increasingly reflecting upon online and in-store sales data, considering the implications of the recently announced employment cost rises and business rates pressure, and scrutinising where best to be located.

“Online shopping and the growth of social commerce has contributed to a lowering of demand for some physical retail stores and boardrooms will continue to keep a close eye on monthly footfall and sales data as 2025 progresses.”