Grocery sales see highest increase in 24 years ‘entirely’ due to rising costs

Grocery sales in Scotland have seen their highest increase in 24 years, bolstered entirely by rising food prices, new figures have shown.

Figures released by the Scottish Retail Consortium (SRC) and KPMG show grocery sales in February 2023 hit their biggest uplift since records began in 1999.

The data also showed food sales increased by 13.3% last month compared to February 2022.

Valentine’s Day also saw clothing and footwear benefit from shoppers spending early on summer fashion. Grocery sales reached their biggest uplift in 24 years, albeit this was entirely due rising food prices, the report said.

The SRC said retail held up “better than expected” in February but consumers continue to hold back on “non-essential” spending amid the ongoing cost-of-living crisis.

While sales increased in February, the 9% figure was below the three-month average growth of 9.9% and the 12-month average growth of 10.2%.

Director of the SRC, David Lonsdale, said purchases associated with Valentine’s Day on February 14 “were the stand-out performer” as sales for cosmetics, fragrances, jewellery and chocolates increased.

Mr Lonsdale added: “Scottish retail sales held up better than expected in February. Whilst the real terms growth rate was admittedly slight, it was nonetheless in positive territory for a fourth consecutive month.

“However, the challenges for retail are far from being in the rear-view mirror and the costs crunch affecting households and firms could make for a bumpy few months ahead.

“DIY and gardening products did well with households looking at home improvements whilst energy efficient appliances continued their strong run.

“By contrast, bigger ticket furniture items fared poorly as did home entertainment appliances which had enjoyed a purple patch through much of the pandemic period.”

Mr Lonsdale said retailers who have adapted their offering in response to rising costs affecting households were “performing better”.

But he warned: “No retailer can rest on their laurels in this tough and uncertain trading environment.

“That’s why the industry is looking to both the Chancellor in his Spring Budget and the incoming First Minister for action to support living standards and an approach to regulation and costs which helps rather than hinders retailers’ ability to keep down shop prices.”

Paul Martin, UK head of retail at KPMG, said: “While Scotland saw total sales growth in February of 9%, inflation is still running at around 10% and therefore any real terms growth was minimal.

“With increases in energy, broadband, mobile phone and council tax bills on the horizon, consumers will continue to take steps to reduce spend where they can – switching where they shop, what they buy, whilst also cutting back on activities, such as eating out and takeaways.

“Price and promotional strategies continue to be increasingly important growth engines for retailers looking to remain profitable and gain an edge over competitors.

“The outlook continues to be challenging with falling consumer spending in real terms and as more people choose to shop by ‘occasion’, retailers will be pulling out the stops for a buoyant Easter and Mothers’ Day.”