Scottish retailers challenged as non-food spending falls

It was a “challenging” January for Scottish retailers as like-for-like sales fell 0.7% compared to last year, according to a new survey.

Non-food sales fell 3.6% as belts were tightened after the Christmas period.

Food price inflation was behind a 4.2% rise in food sales, according to the SRCKPMG Scottish Retail Sales Monitor.

Adjusted for deflation, January sales increased by 0.3%.

Ewan MacDonald-Russell, head of policy and external affairs at the Scottish Retail Consortium, said: “January is always a challenging month for retailers after the vital Christmas period, and 2018 was no different.

“Overall there was a real-terms rise in sales of 0.3%, but below the three- and 12-month averages.

“As with previous months, the rise in food sales is the driving force behind this growth, with the 4.2% rise bringing the 12-month average to the highest point in over six years.

“That rise is still being lifted by food price inflation, but traditional Scottish products did well, including strong haggis sales as customers toasted the bard of Ayrshire.

“Non-food sales continued to struggle, with several retailers offering significant promotional activity to encourage sales.”

Mr MacDonald-Russell expected consumers to continue to be careful with their money in the coming months.

“With income and council tax rises coming in later this spring, along with inflation and potential interest-rate rises, retailers will have to continue to work hard to encourage consumer spending in the months ahead,” he added.

Adjusted for the estimated effect of online sales, total non-food sales declined by 2.5% compared to January 2017, when they decreased by 1.8%.

Craig Cavin, KPMG’s head of retail in Scotland, said: “Retailers will be glad to see the back of January.

“Sales will have been impacted by both the tightening of purse strings post-Christmas, as well as a flurry of snowstorms dissuading shoppers from visiting the high street.”

“The great divide between grocery and non-food sales performance also continued throughout January.

“The rising cost of living saw consumers opting for heavily discounted goods, particularly in non-food sectors, putting further pressure on retailers’ margins.

“January is always a challenging month for retailers due to the festive squeeze, but this month’s figures reflect wider trends. Retailers must continue to adapt to changing consumer habits.”