THE chief executive of Scotmid has hailed the impact of the hot summer weather on food sales as it recorded an interim trading profit of £2.3 million – up 16 per cent on the same period last year.

John Brodie declared it had been a “tale of two halves” for the Edinburgh-based co-operative in the 26 weeks ended July 28, with the fall-out from the Beast from the East in February and March offset by the benefit brought by soaring summer temperatures.

Sales of beer, soft drink, burgers and ice-cream leapt in Scotmid’s 180 Scottish stores as Scots enjoyed the World Cup and embraced outdoor eating and drinking, helping turnover climb by £3m to £184m.

Mr Brodie said it was pleasing that the co-operative had been in a position to capitalise on the upswing in demand in its convenience stores. But he said the fundamental structural challenges laying siege to the retail sector – increasing costs, weak consumer sentiment and the shift to online sales – remain.

“The retail operating environment remains exceptionally challenging,” Mr Brodie said. “As the SRC (Scottish Retail Consortium) would call it, the cumulative burden still exists of a weak economy, structural changes and cost increases all impacting on retail businesses. In the last six months, we’ve seen more businesses struggling with that cumulative burden than we probably have ever seen [before].”

Following recent controversy over huge hikes in business rates, Mr Brodie said he believes a fundamental review of how businesses contribute to local authorities is needed in the long term. He said this is required to address the “disproportionate burden on bricks and mortar retailers”.

Asked if he would like to see tech giants which specialise online retailing pay more in tax, Mr Brodie replied: “It is a matter for other businesses to determine their tax strategies. However, we are immensely proud to hold the Fair Tax Mark as an organisation, which says we contribute to the economy of this country by paying a fair amount of tax.”

Mr Brodie also cited ongoing Brexit uncertainty among the challenges facing food retailers, declaring that the lack of information on the UK’s future relationship with the European Union (EU) was making “planning difficult”. He said Scotmid benefits from being a member of the Co-operative Group’s buying arm which sources a high proportion of its food from British suppliers. With Scotmid also selling significant amounts of food and drink from Scottish suppliers, it means it has been less exposed to the increase in import costs sparked by sterling’s collapse than other grocers.

However, the ongoing uncertainty over customs arrangements on the border between Northern Ireland and the Republic of Ireland after Brexit is a “real concern” to the co-operative. Scotmid operates 15 Semichem toiletries stories in Northern Ireland which attract customers from the Irish Republic.

Mr Brodie said: “The level of cross-border trade is not what it was a few years ago, although it is still an important part of trading for Semichem in Northern Ireland, for the stores near to the border. We’re watching developments there very closely.”

More generally, trading conditions for the 90 Semichem stores were reported by Scotmid to be challenging in the first half. However, Mr Brodie noted its “trading result improved at the halfway mark because of action taken to reduce costs.”

Elsewhere Scotmid, which employs around 4,000 staff, saw growth at its Funerals business following a rise in funeral numbers. And Scotmid Property posted a “another record surplus” in the first half, boosted by improved rental income.

Mulling the outlook, Mr Brodie said: “The likely return to more normal weather will make the second half of 2018 more challenging. So we will continue to focus on innovation, effective investment and tight control of costs to continue to make progress in this unforgiving retail market.”