Scottish retail sales show no sign of pre-Olympic boost

Both food and non-food sales decline in July.

New Statesman
A Pound-Mart store in Glasgow, Scotland. Credit: Getty Images

As the dust settles on the Olympic celebrations in London, it's bad news from the Scottish Retail Consortium (SRC) and KPMG. Their monthly retail sales monitor shows that total retail sales in Scotland declined by 0.7 per cent in July, compared to a growth of 1.7 per cent in the same month last year.

Sales on a like-for-like basis declined by 2.2 per cent, where it saw growth of 0.2 per cent in July 2011.

Food sales performance was disappointing and remained flat over July 2011, while non-food sales declined by 1.5 per cent, despite an improved performance from clothing and footwear.

Like-for-like and total retail sales growths remain below the national average. Like-for-like sales growth in Scotland has lagged behind the UK every month since the beginning of last year.

Richard Lim, economist at SRC, said:

July was not a good month. There’s no sign of any pre-Olympic boost for Scottish retail in these figures and cutting back is becoming more widespread. Apart from one Easter-distorted month, food sales performance was the worst since the SRSM began in 1999. Even if people bought party food ahead of the games, they put fewer other things in their trolleys, leaving food spending virtually the same in cash terms as a year ago.

Many people have been buying fewer non-food goods and concentrating on must-haves for a long time. As this lengthy period of falling disposable incomes goes on, food spending is coming under extra pressure too, as people search out offers and value. Also, with food inflation at a two-year low and competition intense, price rises are making much less of a contribution to the growth of food sales.

The bright spot in non-food retail was clothing and footwear. Severe discounting and some cooler weather in July got people buying new autumn ranges and school uniforms did well but, generally, Scottish retailers continue to scan the horizon for sight of the urgently-needed upturn.

David McCorquodale, head of retail in Scotland, KPMG, said:

July was another disappointing month for the Scottish high street with rainfall, particularly in the south and east, keeping any summer revival at bay. Despite heavy promotions from retailers, like-for-like sales in both food and non-food were down by more than 2 per cent on the previous year.

Total food sales were virtually flat. That’s lower than inflation, a real-terms fall, and reflective of continued caution in spending on anything other than necessities. Total non-food sales were down by 1.5 per cent as families grappled with the ongoing effects of unseasonal weather on clothes purchases as well as continuing to avoid committing to buying larger ticket items.

The lack of any feel-good factor encouraging consumers into the shops has provided a set of figures much more indicative of the true underlying trend. These show weakness in sentiment as disposable incomes remain squeezed, despite the fall in headline inflation. It's a real challenge for retailers to grow sales and many are only achieving this at the expense of margins.

Time will tell what uplift came from a fantastic Olympic Games but the eventual arrival of summer weather may be too late with schools back in the next two weeks.