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Festive retail fears as growth slows sharply

YEAR-on-year growth in the value of Scottish retail sales slowed sharply in November, industry figures have revealed, suggesting caution among consumers ahead of the key festive trading period.

spree: The industry is hoping sales figures increase right up to Christmas day, as it is on a Wednesday. Picture: Martin Shields
spree: The industry is hoping sales figures increase right up to Christmas day, as it is on a Wednesday. Picture: Martin Shields

The figures suggest retailers will, for yet another festive season, face a challenge in persuading hard-pressed consumers to part with their cash, with shoppers showing no signs of getting carried away as a result of the recent run of less dismal economic data. Major retailers have already been discounting sharply, continuing the pattern seen in recent years in the run-up to Christmas.

The Scottish Retail Consortium, in its latest monthly monitor published today, reveals that the value of sales in November was up 1.6% on the same month of last year. This represents a slowdown from the 2.1% year-on-year growth in the total value of Scottish retail sales in October.

And the year-on-year rise in sales in November was modest even though the prior-year comparative was weak. In November 2012, the value of Scottish retail sales had been down 1.2% on a year earlier.

Strong demand for clothing in November, as the weather turned colder, failed to prevent the slowing of year-on-year growth in overall retail sales north of the Border.

The 1.6% year-on-year rise in sales in Scotland in November was well adrift of a corresponding 2.3% rate of increase for the UK as a whole, revealed in figures last week from the British Retail Consortium.

This modest growth in sales comes at a time when household incomes continue to fall in real terms, with pay growth lagging inflation.

The SRC said of November trading: "The cold and dry conditions provided perfect opportunities for shopping trips and customers finally revamped their winter wardrobes."

It noted strong demand for footwear, as well as clothing.

The value of food sales in Scotland in November was up 2.3% on the same month of 2012. Food sales had been up 3% year-on-year in October.

SRC head of policy David Martin said: "November's figures strengthen the sense that many of us are still cautious and holding off on much of our seasonal spending until Christmas gets closer. After a subdued showing earlier in the autumn, fashion's fortunes were reversed by growing demand for warm clothing and boots, making it the month's best-performing category."

Mr Martin observed that, elsewhere in the non-food category, much of the growth had been driven by customers responding well to deals and discounts "ushered in by the Christmas countdown".

He said the slowdown in year-on-year growth of food sales had reflected lower inflation rates and a general trend of shoppers focusing on making savings and buying on promotion as far as possible.

Mr Martin added: "Overall, this is an acceptable but unexceptional result, broadly in line with the annual and quarterly averages for (year-on-year) growth, which suggests a slow but steady start to festive spending. Retailers will be pinning their hopes on momentum picking up as we enter the last few weeks before the big day."

The SRC figures show that, over the three months to November, year-on-year-growth in Scottish retail sales value averaged 1.8%. Over the 12 months to November, year-on-year growth in sales value averaged 1.7%.

David McCorquodale, head of accountancy firm and SRC survey sponsor KPMG's UK retail sector practice, said: "Scottish consumers are stepping into Christmas with caution but from a position of greater confidence than last year. At this stage last year we were used to recording negative total sales performance, particularly in the non-food segments."

He added: "Despite consumers remaining cash-strapped from the longest recession on record, signs are that this Christmas will be better than last year and that those retailers who have invested smartly in their multi-channel capabilities will grab the share of it from those who haven't. With Christmas falling on a Wednesday this year, the high street still has extra shopping days to benefit when internet purchases can't promise delivery before Santa."

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