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Retail results cast a gloom over sector

THE value of Scottish retail sales in October was down 1.3% on the same month of last year, according to an industry survey which one sector expert viewed as a "worrying signal" for the key festive trading period.

FOOTFALL: Glasgow's Buchanan Street might be busy, but spending is down on last year. Picture: Colin Mearns
FOOTFALL: Glasgow's Buchanan Street might be busy, but spending is down on last year. Picture: Colin Mearns

The Scottish Retail Consortium (SRC) survey, published today, indicates the sector continues to face tougher times north of the Border than in other parts of the UK.

A survey published earlier this month by the British Retail Consortium showed that the value of UK retail sales in October was up 1.1% on the same month of last year.

October is the 19th consecutive month in which the year-on-year movement in retail sales value has been poorer in Scotland than in the UK as a whole.

The SRC has cited a belief that public sector job cuts may be having a greater impact on spending in Scotland than in some other parts of the UK. It has noted that public sector jobs constitute a greater proportion of total employment in Scotland than in other parts of the UK.

Discretionary consumer spending was again particularly weak in Scotland in October, according to the latest SRC figures. The value of non-food sales, the more discretionary element of spending, was in October down 4.7% on the same month of last year. The value of food sales in Scotland last month was up 2.3% on a year earlier.

The SRC and BRC surveys signal a worsening of high street trading conditions between September and October.

The SRC reported last month that the value of retail sales in Scotland in September was up 1% on the same month of last year. The BRC reported year-on-year growth in UK retail sales value of 3.4% for September.

The SRC said, taking shop-price inflation into account, Scottish retail sales in October were down 2.8% on the same month of 2011 in real terms.

Excluding April, in which trading was affected by the timing of Easter, the 1.3% annual fall in Scottish retail sales value in October was the worst such year-on-year comparison since January.

David McCorquodale, head of accountancy firm and survey sponsor KPMG's retail practice in the UK, said: "October's sales figures send a worrying signal about the festive season ahead for retailers in Scotland."

Fiona Moriarty, director of the SRC, said: "This really wasn't the result retailers wanted. September's modest sales boost offered some cause for cautious optimism, but continuing concerns about the economy led many customers to batten down the hatches again in October."

She added: "The non-food category was a tale of two halves. While clothing and footwear performed well, it was a different story for other non-food goods such as electricals and items for the home.

"Household incomes are still being squeezed, and many people will have an eye on saving ahead of Christmas rather than buying big-ticket and discretionary items."

A recent survey by pollster GfK NOP, on behalf of the European Commission, showed UK consumer confidence fell to a six-month low in October.

Ms Moriarty said: "With consumer confidence at a six-month low, hopes of sales picking up in the run-up to Christmas will hinge on retailers reading the market closely – that means offering customers opportunities for seasonal spending at competitive prices." The BRC said this month that annual UK shop-price inflation rose to 1.5% in October from 1% in September. Annual food-price inflation rose to 4% in October from 3.1% in September

Mr McCorquodale said: "Food and drink sales failed to track inflation and therefore reflected a decline in volumes. Despite the cold temperatures in October, clothing and footwear sales had good growth in the first week but then faded in the latter half of the month."

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