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Scotland sees worst fall in retail sales since 1999

Retail sales in Scotland were down 1.1% in May, compared to a 2.4% increase in the same month last year according to figures released by the Scottish Retail Consortium and KPMG.

GENERAL MERCHANDISE

Scotland sees worst fall in retail sales since 1999

This was the worst fall in total sales since the survey began in 1999. Like-for-like sales values were down 3.2% from May 2010, when sales had fallen 0.8%.

On a like-for-like basis, food sales dropped below their year-earlier level after April's strong growth and non-food sales were also well down on a year ago. In the cold wet weather, consumers' underlying uncertainty about jobs and incomes resurfaced, hitting clothing, footwear and homewares. Big-ticket purchases suffered most and were often promotion-led.

As in the UK, both like-for-like and total sales were much worse in May. Consumer confidence remains weaker in Scotland than in the UK as a whole.

Fiona Moriarty, Director of the Scottish Retail Consortium, said: "After the combination of unusually sunny weather, Easter and the extra bank holiday in April which boosted spending, this is a return to reality for Scottish retailers. It's clear that April's good figures were a blip, with May producing the worst fall in total sales values since we began this survey in 1999.

"People remain nervous about the economy and their personal finances. Non-food sales in particular are struggling and shoppers don't have the confidence to spend on big-ticket items. Even heavy discounting has failed to help spending on homewares, including furniture and floorcoverings, as consumers conserve their cash for more immediate essentials. Customers who bought summer shoes and clothing during the heat of April have reined back their spending and turned to their winter wardrobes again during the May wash-out.

"The tough outlook for the high street means shoppers stand to benefit from increased competition and plenty of special offers, but the outlook for retailers remains challenging."

David McCorquodale, Head of Retail in Scotland, KPMG, said:
"Despite retailers enjoying a strong April, boosted by Easter, the Royal Wedding and sunshine, unfortunately we can see that sales have dipped again, in line with a longer term trend. The results for May show total sales were down by 1.1per cent, which is the largest drop since records began.

"Like-for-like sales declined against May last year by 3.2 per cent and while last year's figures may have benefitted from better weather and the build-up to the World Cup, we are most certainly seeing a continuation of a worrying trend for 2011. Across all categories, footfall and volumes are down as consumers continue to be wary as to how they spend their reduced disposable income. In non-food items in particular, where like-for-like sales fell by almost 5 per cent, despite being flattered by the recent VAT increase, necessity and the search for a bargain have been the main themes. Many retailers have responded with promotions but as they themselves battle with cost inflation and upward rent reviews, the squeeze on margins and lower volumes is negatively affecting their own cashflows.

"I fear a tough road ahead for the remainder of the year where more than a long, hot summer is required."

 

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