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Discounts help retail sales get year off to good start

THE value of Scottish retail sales in January was up 4.3% on the same month of 2013, as consumers were tempted by discounting, after displaying caution during the key December trading period, an industry survey reveals.

CONFIDENCE: Shoppers, such as these on Glasgow's Buchanan Street, have been out in greater numbers due to the lack of snowfall. Picture: Jamie Simpson
CONFIDENCE: Shoppers, such as these on Glasgow's Buchanan Street, have been out in greater numbers due to the lack of snowfall. Picture: Jamie Simpson

The Scottish Retail Consortium (SRC), publishing the survey today, declared retailers north of the Border would take heart from the latest sales figures, given the poorer showing in December.

In December, the value of Scottish retail sales had been down 1.1% on the same month of 2012.

However, while the latest figures show a much-improved situation in January, the year-on-year increase in the value of retail sales in Scotland last month was adrift of a corresponding advance of 5.4% reported for the UK as a whole last week by the British Retail Consortium (BRC).

The year-on-year rise in Scottish retail sales in January was driven by the non-food category. The value of non-food sales in Scotland in January was up by 7% on the same month of 2013.

Food sales north of the Border in January were up by 1% on a year earlier, in value terms. Against the backdrop of a firmer housing market and a rise in consumer confidence in January, the SRC figures show strong sales in the furniture and flooring category. The figures also show strong demand for home accessories and household textiles.

Clothing sales were strong, as consumers reacted well to the clearance sales, the SRC said.

David Lonsdale, director of the SRC, said: "Scottish retailers will take heart from these sales figures, which represent a strong start to the year.

"They build on a generally positive 2013, and compensate significantly for the slightly poorer sales we reported in December 2013."

He added: "Particularly strong results were seen in clothing, furniture, and other non-food items such as electricals.

"When Scottish retailers have got their offer right, consumers have been enthusiastic about taking advantage of promotions, as well as buying from the new ranges in store. All non-food categories performed well in January."

Taking account of annual shop-price deflation, calculated by the BRC at 1% in January in the UK as a whole, the SRC noted that the volume of retail sales north of the Border last month was up by 5.4% on a year earlier on a rounded basis.

The BRC calculated annual food-price inflation slowed to 1.5% in January, from 1.7% in December. This implies a 0.5% year-on-year fall in the volume of food sales in Scotland in January.Annual deflation of 2.7% was recorded in the non-food category by the BRC in January. This signals that the volume of sales in the non-food category in January was up nearly 10% on the same month of last year.

David McCorquodale, head of accountancy firm and SRC survey sponsor KPMG's UK retail sector practice, said: "Retailers in Scotland will have breathed a sigh of relief throughout January as the snow stayed away and consumers had the confidence to spend.

"While some of the growth in non-food has been achieved in the sales at reduced margins, there will be retailers who feel they've begun to move the dial in recovery terms."

He added: "Drivers of growth have been clothing and footwear, particularly in the sales, and the continued march of electricals. However, the relief is perhaps best felt in furniture and flooring, where house price growth has fuelled spending."

But both Mr McCorquodale and Mr Lonsdale highlighted the relative weakness of food sales.

Mr McCorquodale said: "Growth in food sales remained challenging as the grocers battle for market share, and consumers show less loyalty as they exercise their personal austerity around necessities.

"This sector will remain competitive for some time."

Mr Lonsdale said: "Food has performed slightly less well. However, over the last three months, food performance has been slightly above that in the rest of the UK.

Contemplating the outlook, Mr McCorquodale said: "Recovery has its ups and downs, and the prospect of a sharp winter blast has not yet gone away, so no retailer will be resting on its laurels.

"But this is a strong start to 2014 in Scotland, and gives encouragement for the months ahead."

Mr Lonsdale said: "All Scottish retailers will be working hard on their offer to maintain the good momentum."

Based on the BRC's UK-wide findings, the SRC estimated the value of non-food sales in Scotland in January would have been up 8.2% on a year earlier if online and non-store sales were included.

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