A heavy fall in retail sales in Scotland in contrast to a rise in sales south of the border is mostly likely attributable to the fall in profitability of Scotland’s important oil and gas industry, according to leading economists polled by the Sunday Herald.

New figures published last week showed that the value of retail sales in Scotland in November was down sharply on a year earlier, in contrast to a rise in the UK as a whole.

The data, from the latest Scottish Retail Consortium-KPMG Retail Sales Monitor, showed that the total value of Scottish retail sales in November was down 2.3 per cent on the same month last year – although food sales were up slightly once online purchases were factored in.

By contrast, in the UK as whole, total retail sales last month were up 0.7 per cent compared with November 2014, as consumers benefitted from a rise in discretionary spending power, driven by rising wages and falling prices.

The fall in sales in Scotland came in spite of a 3.3 per cent fall in average store prices (including petrol stations) in November 2015 compared with November 2014 and in spite of seventeen consecutive months of price falls.

According to the SRC, there is now a clear north-south gap in consumer confidence which is leading to lower retail sales in Scotland.

David Bell, Economics Professor at Stirling University, highlights Scotland’s exposure to the oil industry as prices for Brent crude fell to a new seven-year low of $38 last week.

Despite falling unemployment in Scotland as a whole, the weakness of the oil sector in north-east Scotland has led to a dip in consumer confidence which Bell believes to the main reason for falling retail sales in Scotland.

“In Grampian and Aberdeen there have been a lot of people moving out of relatively well paid jobs towards lower paid and less secure jobs over the last year or so and that would militate against spending lots of money in the short-term or in the run up to Christmas,” Bell said.

Over the next five years, Bell warns, it is also possible that UK government austerity will particularly impact Scotland because of a “subtle change” in the Barnet formula which will see less money being transferred to Scotland. This could mean that retail sales in Scotland continue to diverge from those south of the border.

Leigh Sparks Professor of Retail Studies at Stirling University believes that the stronger economic and housing market performance of London and south-east England is one of the factors behind the differing retail patterns north and south of the border.

If retail sales for the south-east of England were disaggregated from the figures this would likely show that Scotland’s retail sales were broadly similar to those of the rest of the UK, he says, and possibly better than in some other parts of the UK.

Another factor that makes the figures hard to analyse is that Scottish consumers are, because of the geography of the country, more likely to buy online than shoppers in other parts of the UK. Another complicating factor is the issue of where online retailers book their internet sales which varies from company to company, with some booking the sale to the geographic location of the warehouse the goods are dispatched while others book it to the buyer’s home address.

Professor Brian Ashcroft of the Fraser of Allander Institute at Strathclyde University also believes that the most likely explanation for more sluggish retail sales in Scotland is attributable to a decline in household incomes in north-east Scotland brought about by job losses in the oil and gas industry.

But Ashcroft also highlights the fact that there will be parts of Scotland where consumers will benefit from the falling price of oil – which is widely expected to lead to petrol prices dipping below a pound a litre by the end of the year – and this will lead to higher disposable incomes for many Scottish households.

Ashcroft also points to a cultural difference between England and Scotland, where consumers are more likely to use a rise in income to pay down debt rather than go on debt-fuelled spending sprees.


John Lewis experienced its largest-ever single day’s trade on the relatively new US style price-cutting Black Friday on 27th November (the first day after Thanksgiving), when sales were up 11.9 per cent on last year. Dixons Carphone and Amazon.co.uk also reported their busiest ever trading days on Black Friday.

However, until December’s retail sales figures are released, it will not be known whether the import of Black Friday to the UK high street has increased overall sales or has simply encouraged consumers to bring forwards spending that they would otherwise have made in December.

Total sales at John Lewis’s UK department stores rose 3 per cent to £155.2 million in the week ending 12 December compared with the same week last year. Online sales were up 15 per cent, powered by visits from mobile devices and traffic to apps, which was 43 per cent higher.

The head of John Lewis’s Glasgow branch Isabella Miller told the Sunday Herald that the main trend she had noticed this year is a 9 per cent growth in the number of customers who both shop in store and then make follow-up purchases online.

Miller said that sales of Cashmere jumpers, “wearable technology”, such as the i-watch or wrist worn devices that measure the wearer’s physical activity, have been particularly high in the run-up to Christmas as have sales of the Nutribullet to make smoothies.