Scotland's retail sector continues to struggle

Shopping - credit: PA

Scotland’s retails sector has continued to struggle, with the latest figures showing sales in June fell by 0.5 per cent against the same month in 2016, as “nervous customers” delayed spending due to squeezed incomes and worries over the economy.

The Scottish Retail Consortium described the latest figures from the SRC-KPMG sales monitor, which showed non-food sales declined by 4.2 per cent compared to June 2016, as “disappointing”.

Ewan MacDonald-Russell, SRC head of policy and external affairs, warned that inflation on essential goods is forcing cash-strapped consumers to put off discretionary spending and exacerbating pressure on shops.

Meanwhile Craig Cavin, head of retail in Scotland at KPMG, said the drop in non-food sales is becoming “something of a bleak trend”.

The figures show food sales grew by 4.2 per cent versus June 2016, when they had increased by 0.1 per cent. This pulls the twelve-month averages to 1.5 per cent, the fastest since April 2014.

Scottish sales increased by 0.2 per cent on a like-for-like basis compared to June 2016, when they had decreased by 1.4 per cent. On a six-month basis, like-for-like sales fell by 0.2 per cent, the first negative rate since November.

Craig Cavin, head of retail in Scotland at KPMG, said: “Scottish retail’s struggle continued in June, and the figures paint a familiar picture - strong food sales negated by poor non-food performance.

“The drop in non-food sales, down 4.2 per cent compared to last year, is becoming something of a bleak trend, whilst poor sales in summer ranges and the late arrival of some discounts put a dent in clothing figures. Elsewhere in non-food, the dreich weather impacted on sales of outdoor furniture.

“We should know not to rely on summer sunshine in Scotland or risk disappointment, but a gloomy month has taken its toll nonetheless. The effect of Scotland’s wettest June in over a century was felt across the industry.

“Phones, tablets, games, and health and beauty products were a ray of sunshine through the clouds, but retailers will look for non-food performance to pick up if the sector is to make gains.”

Adjusted for the estimated effect of online sales, total non-food sales fell by 1.7 per cent versus June 2016, when they had decreased by 0.5 per cent. On a three-month basis, the online-adjusted total non-food change was -1.2 per cent, below the UK average of +1.2 per cent.

Ewan MacDonald-Russell, SRC head of policy and external affairs, said: “A disappointing June for retailers as nervous customers continue to postpone discretionary spending due to squeezed household incomes and worries about the economy. In real terms sales fell by 0.1 per cent, with non-food sales in store down by 4.2 per cent. Even when the positive impact of online sales are included, non-food sales were down -1.2 per cent across the last three months.

He added: “Our concern is inflation on essential goods is now forcing cash-strapped consumers to put off discretionary spending which exacerbates the pressure on shops. With a quarter of a million Scottish retail jobs it’s crucial the Scottish Government carefully considers the impact on spending and the health of the retail industry when they consider income tax rates later this year.”