Gloomy outlook for Scottish retail sales

Group Business Editor

Wednesday 13 June 2012

SCOTTISH high streets failed to enjoy the sharp year-on-year bounce in sales value recorded for the UK as a whole in May, and appear to have suffered a tumble in volumes, grim industry figures reveal today.

STORMY TIME: High street sales value in May rose slightly compared to the same period last year, but it has still been described as a weak month.

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Ian McConnell Business Editor

The Scottish Retail Consortium's (SRC) latest figures show the total value of retail sales north of the Border in May was up only 0.1% on the same month last year. This was in stark contrast to a 3.4% year-on-year leap in sales value in the UK as a whole last month.

And, given the latest reading for annual UK consumer prices index inflation is 3% for April, the meagre 0.1% year-on-year rise in sales value in Scotland last month points to a steep drop in volumes.Ian Shearer, director of the SRC, meanwhile cautioned that sales last month were being compared with a very weak May 2011. Sales in May 2011 had been down 1.1% on the same month of 2010 – which was at that stage the steepest year-on-year drop since comparable records began in 1999.Mr Shearer said the household budgets of Scottish shoppers were "still under severe strain".Sales in Scotland in the non-food category, the more discretionary element of consumer spending, were particularly weak again in May, continuing a long--running pattern.The SRC figures show the value of non-food sales in Scotland last month was down 3.4% on May 2011. The value of Scottish food sales last month was up 3.8% year-on-year. In April, Scotland had recorded a 4.1% year-on-year tumble in total sales value.Much of April was cold and wet. However, the May sales figures show Scottish retailers missed out on much of the weather-related boost enjoyed by their counterparts elsewhere in the UK even though Scotland also enjoyed high temperatures and glorious sunshine late last month.The sales figures will add to concerns over the health of the Scottish economy. The UK as a whole has tumbled back into recession, with overall gross domestic product dropping by 0.3% in both the fourth quarter of 2011 and in the opening three months of this year.Scottish GDP fell by 0.1% in the fourth quarter of last year. It will not be known until July whether or not Scotland, in the opening three months of 2012, suffered a second consecutive quarter of contraction which would constitute renewed recession north of the Border.Mr Shearer said of the May sales figures: "A welcome spell of warmth at the end of May helped lift these figures but the burst of summer didn't bring a boost on the scale enjoyed elsewhere."He added: "The underlying picture remains weak, showing sales falling in real terms for the sector overall, and this is particularly worrying given that they are being compared against poor figures for May in 2011. Consumer caution persisted, household budgets are still under severe strain and most shoppers are committed to buying only what they consider to be essentials."David McCorquodale, head of retail in Scotland for accountancy firm and survey sponsor KPMG, said: "After a dismal April, May was a slightly better month statistically and many retailers will have breathed a small sigh of relief, particularly in the last week of May as the sun shone. "However, closer scrutiny of the comparisons with last May doesn't make for comfortable analysis. Total sales rose only 0.1% against last May, which itself recorded the worst fall we'd seen up to then."He added: "A week of sunshine and Scotland's muted celebration of the Jubilee will not overcome the underlying issues facing the industry, which remains under pressure from a combination of low consumer confidence and squeezed incomes."He said more high street casualties were forecast.

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Gloomy outlook for Scottish retail sales

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