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Distraction of Games blamed for slump on the high street

SCOTTISH shops struggled in July with retail sales experts believing the Commonwealth Games were actually a distraction.

BUSY: But Glasgow streets were thronged with sports fans, not shoppers.
BUSY: But Glasgow streets were thronged with sports fans, not shoppers.

Overall retail sales dropped by 1.8 per cent in July 2014, compared with the previous year when they had risen by 1.4 per cent

Food sales were 2.8 per cent down on July 2013, when they had increased by 5.6 per cent. Retailers saw good demand for celebratory food and traditional Scottish fare, such as haggis and whisky, driven by the popularity of the Commonwealth Games, though some reported that wet weather at the end of July obstructed sales.

The sales monitor produced by the Scottish Retail Consortium and KPMG, when discussing a decline in footwear sales, said: "The excitement surrounding the Commonwealth Games and the warm weather encouraged people to enjoy outdoor events, perhaps distracting them from shopping."

The sales dip came a week after official figures showed that pay grew at its slowest rate on record in the three months to June 2014 as the squeeze on incomes intensifies despite the UK experiencing the strongest headline economic recovery of any Western economy.

The Office for National Statistics (ONS) said pay excluding bonuses rose by just 0.6 per cent in the second quarter of the year.

But the employment rate hit 73 per cent in April to June 2014, while the unemployment rate fell to 6.4 per cent - the lowest since the end of 2008. It remains a conundrum for Bank of England policymakers, who have slashed their forecast on wage growth in half.

Bank of England governor Mark Carney admitted the rate-setting Monetary Policy Committee was increasingly debating the prospect of the bank rate rising from its 0.5 per cent emergency level, where it has sat for 65 months.

David McCorquodale, head of retail at KPMG, said that while there had been a healthy rise in footfall on high streets and shopping centres in July, it didn't translate to a rise in retail sales.

Referring to the Commonwealth Games, he added: "As with the Olympics two years ago, these events may boost the restaurant trade but don't always boost high street sales."

Dougie Adams, adviser to the economic forecasting group EY Scottish ITEM Club, said: "With the Commonwealth Games effect, if people are spending money going to the event, eating out and things like that then maybe they won't spend so much in shops.

"When you come to watch the Commonwealth Games, you spend money on transport, your hotel, on eating, but do you in the shops?"

He said he also felt there was more consumer caution this year, with worries about interest rates following a "consumer surprise on the upside in 2013" with positive economic forecasts

Garry Clark, head of policy and research at the Scottish Chambers of Commerce said that while footfall in Glasgow was "extremely high" due to the Commonwealth Games, this was not necessarily reflected across Scotland.

"For the rest of the country, the very mixed July weather was undoubtedly a factor in maintaining last year's high levels of sales. On the positive side, Scotland has been and will remain in the 'shop window', with the Commonwealth Games and the Ryder Cup offering up positive and compelling reasons to visit Scotland now and in the future. Retailers and our tourism sector will be looking to capitalise on these opportunities well into next year and beyond."

Colin Borland, the Federation of Small Businesses' head of external affairs, said Scotland's business had reported increased confidence, rising turnover and increased profits in the second quarter. Anecdotal evidence suggested central belt businesses in hospitality and tourism had a busy summer and with the Ryder Cup on its way, the north of Scotland expects a similar boost.

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