RETAILERS are going into the golden Christmas trading quarter this year amid “clear signs customers are battening down the hatches ahead of the expected winter costs crunch”, according to new analysis.

While the industry has been showing signs of recovery, with total sales increasing by 6.5 per cent set against September 2021, where just 1.3% growth was recorded, inflation increases have curbed real-terms growth.

When figures are adjusted to consider inflationary rises, the year-on-year change was just 0.8%, the Scottish Retail Sales Monitor, produced by the Scottish Retail Consortium and KPMG, showed.

A portion of the sales growth will also be a reflection of rising prices rather than increased volumes to take into consideration high inflation.

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Customers are focusing on essential items such as food and energy-saving products, such as duvets and air fryers amid the cost of living crisis, the report said.

It means that retailers are facing the tough decision of keeping costs low to encourage shoppers to buy their goods, or increasing prices to protect profits, it added.

The effects of the figures mean retailers may struggle to convince shoppers to spend on Christmas gifts this year, said Ewan MacDonald-Russell, SRC deputy head.

"Scottish sales showed a sliver of growth in September, with a real-terms rise of 0.8%," he said. "Nonetheless, there are clear signs customers are battening down the hatches ahead of the expected winter costs crunch.

"Food sales fell in real terms as customers cut back on the volumes of goods. With food inflation now outpacing sales, even grocery retailers are feeling the pressure as customers focus on essential items.

"Non-food sales were dominated by consumers looking for ways to reduce their energy bills. Duvets, blankets and air fryers all did well as customers look to cut costs and prepare for winter."