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Scottish sales growth slows sharply

The SRC-KPMG Scottish Retail Sales Monitor for January 2011shows like-for-like sales in January were 0.9% lower than in January 2010, when they had fallen 0.6%.

GENERAL MERCHANDISE

Scottish sales growth slows sharply

The SRC-KPMG Scottish Retail Sales Monitor for January 2011shows like-for-like sales in January were 0.9% lower than in January 2010, when they had fallen 0.6%.

Total sales were 1.9% up on a year ago, when they had risen 2.8%.

Food sales fell below their year-earlier level for the first time since July 2010, as people used up stocks bought in December's snow and cut back on non-essentials. Clothing and footwear remained well down on a year ago. Homewares and furniture showed some early gains, driven by clearance and pre-VAT rise purchases, but sales fell back later in the month.

Overall like-for-like sales weakened to show a year-on-year decline while those in the UK picked up to show growth. A much steeper fall in consumer confidence in Scotland than in the UK meant shoppers were much more cautious.

Fiona Moriarty, Director of the Scottish Retail Consortium, said,"People enjoyed themselves over Christmas but cut back once the New Year got under way. There was some last minute spending at the start of January to take advantage of promotions and to beat the VAT rise, but consumers then tightened their belts.

"Shoppers were able to use up stocks of food they'd built up in their cupboards during December's snow and as a result needed to buy less. Festive treats were quickly replaced by core basics as shoppers budgeted more carefully and switched to healthy-eating plans. Consumers were willing to buy practical cold weather items such as duvets but reluctant to splash out on non-essential items.

"January's fall in like-for-like spending marks the start of a potentially difficult trading period for retailers. Consumer confidence in Scotland is below that for the rest of the UK and falling faster. Concern remains about the impact of cuts on jobs and the resulting knock-on effect on personal and household finances."

David McCorquodale, Head of Retail in Scotland, KPMG, said,"With like-for-like sales for January down by 0.9 per cent in Scotland compared with sales for January 2010, a month when, for many days, the whole country was deep under a blanket of snow, this is deeply disappointing.

"Food and drink sales were hit particularly badly and fell by 1.4 per cent. Having stocked up on store cupboard essentials during December's snow, consumers had less need to buy in January.

"Non-food sales were down 0.4 per cent. They were strongest in the first week of the year before falling away later in the month as people's underlying financial concerns shaped the way they spent their money. Early on, shoppers took advantage of the clearance sales with casual winter clothing and footwear selling well. Consumers looking to beat the VAT rise were also quick to spot a bargain with large items such as fitted furniture, white goods and beds selling well.

"With footfall on the high street below average and personal financial worries high on the family agenda, we remain cautious for 2011."

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