Retail sales growth stronger in Scotland than in UK as a whole

The Scottish Retail Consortium, publishing its monthly figures today, declares these will “bring a little relief” but expresses caution over whether the improvement will be sustained.

Scottish retail sales value in January was up by 1.3 per cent on the same month of last year. This compares with a 0.4% year-on year rise for the UK as a whole in January reported last week by the British Retail Consortium. The value of Scottish retail sales in January 2019 had been up by 2.2% on a year earlier, so the year-on-year gain last month built on a relatively strong advance.

The Scottish figures for January show the first year-on-year rise in non-food sales value since last spring, of 0.2%. This category tends to reflect the more discretionary elements of consumer spending. Food sales value showed a 2.7% year-on-year increase.

The January sales figures for Scotland compare favourably with respective average year-on-year declines of 0.1% and 0.3% over the last three and 12 months.

Taking account of shop-price deflation, the SRC noted retail sales volumes north of the Border in January were up by 1.7% on the same month of last year.

Asked for his view of the January sales figures, SRC director David Lonsdale replied: “It was encouraging I think, after a pretty tepid final two or three months to the end of last year. At the end of the day, one swallow doesn’t herald a summer. Whether it is sustainable or not is the big question. [It is] certainly a pleasing performance and certainly a more broadly based improvement as well.

“I think we have seen non-food in particular do quite poorly over much of the past year so [it is] pleasing to see it wasn’t just food that was holding its own but non-food as a whole did well.”

The January figures cover the period from December 29 to February 1.

The SRC noted, in the context of strong food sales, that Hogmanay and Burns Night had fallen during the period.

Ewan MacDonald-Russell, head of policy and external affairs at the SRC, highlighted solid sales of small electrical goods, do-it-yourself items, mobile phones and furniture in January, although he also flagged the likely impact of discounting on profit margins.

He noted: “Fashion and footwear sales continued to be sluggish, with a combination of wet weather and customers’ concerns over sustainability appearing to inhibit purchases.”

Commenting on the overall Scottish sales figures, Mr MacDonald-Russell said: “Like early daffodils, [January’s] sales figures bring forward signs of optimism for Scotland’s retailers after a chilly few months. Real-terms sales growth of 1.7% will bring a little relief to the high street, especially given the more broadly based pick up across categories, but it remains to be seen if that uplift will be sustained over the next few months.”

Looking ahead to the UK Budget on March 11, he added: “Retailers are…craving certainty, a competitive cost environment, and some encouragement for consumers. The Scottish Budget took some positive steps in this direction earlier this month. We hope the new Chancellor will listen to the concerns of retailers and take action to boost consumer spending and reduce the burden on retailers in next month’s UK Government Budget.”

Paul Martin, UK head of retail at survey sponsor KPMG, cited “some indications that the return to growth is being driven primarily by aggressive sales and marketing activity by high street retailers, which isn’t always good news for bottom lines”.

He added: “January is typically a challenging month for Scotland’s retail sector so any rise – however modest – will be a small victory for the industry following an incredibly challenging 2019.

“It’s too early to say with complete certainty we’re entering a period of renewed consumer confidence, but it’s been a positive start to 2020. The data also compare favourably to the UK as a whole.”