Further costs on the horizon for 2024, warn experts
INDUSTRY chiefs are warning retailers of challenging economic times ahead.
They were speaking out after the latest faltering official inflation figures – despite insights data showing a bumper Christmas for the channel.
British Retail Consortium director of insight Kris Hamer said: “Retailers face a number of extra costs this year that threaten the progress made to reduce prices.
“New EU border checks, disruption in the Red Sea and the potential of a new grocer surtax in Scotland are all challenges that retailers need to navigate in 2024.”
The latest ONS Consumer Price Index figures showed headline inflation rising to 4% in December – up from 3.9% year on year in November.
And while the rate for food and non-alcoholic beverages fell from 9.2% to 8%, alcohol and tobacco inflation jumped from 10.2% to 12.9%.
Despite this, Mike Watkins, head of retailer and business insight at NielsenIQ remained more upbeat about the trading prospects for the year ahead.
He said: “It’s likely that the cautious shopper sentiment seen in 2023 will continue for the first part of 2024.
“But, from late spring onwards, we can anticipate confidence slowly improving.
“The NIQ outlook for 2024 is that Total Till growths will be around 5% but this depends on where food inflation lands during the year. Even so, we can expect to see FMCG volumes turning positive as the year progresses.”
Meanwhile, Kantar data showed that grocery price inflation fell to 6.7% in December, marking the fastest month-on-month drop the analytics firm has recorded.
Kantar’s Fraser McKevitt said: “Retailers were clearly working hard to offer best value and win over shoppers, and promotions were central to their strategy.”
Scotland sees sales slump
SCOTS store bosses had little to celebrate in the run-up to Christmas, according to the Scottish Retail Consortium (SRC).
Its research covering the five weeks to 30 December revealed disappointing sales and footfall figures.
SRC-KPMG retail sales data showed total sales in Scotland rose 1.9% compared with December 2022, when they had grown 11.3%. This was below the three-month average of 2.6% and 12-month growth of 6.9%.
Adjusted for inflation, the year-on-year decline was 2.4%. Total food sales increased by 5.5%, compared with 11.5% in 2022 and the three-month average of 6.2% and 12-month figure of 11%.
The SRC data also found Scottish footfall decreased by 2.2% year on year.
David Lonsdale, SRC director, said: “There was little Christmas cheer for Scotland’s retailers as the value of retail sales in real terms dwindled in December. Grocery sales fared well, albeit December was the weakest monthly performance in food of last year and much of the growth was a consequence of food inflation.
“Visits to Scotland’s stores slipped back compared to the same period the year before, during what is traditionally seen as the busiest trading month of the year. This was the third successive monthly decline, rounding off a pretty drab final trading quarter of the year for Scottish stores.”
