Scottish retail struggles continue as nerves hamper consumer spending

● New survey finds falling non-food sales ‘becoming something of a bleak trend’

June marked a “disappointing” month for Scottish retailers as falling non-food sales negated progress in food and consumers held back on discretionary spend, according to new data published today.

The Scottish Retail Consortium (SRC) and KPMG Scottish Retail Sales Monitor for the month found that for the five weeks to 1 July, Scottish sales increased by 0.2 per cent on a like-for-like basis compared to June 2016, when they had fallen 1.4 per cent.

On a six-month basis, likefor-like sales fell by 0.2 per cent, the first negative rate since November.

In June, total sales in Scotland fell by 0.5 per cent from 12 months previously, when they had fallen by 1.4 per cent, and a better performance than the twelve-month average at -0.9 per cent. Adjusted for deflation measured at 0.3 per cent by the Brc-nielsen shop price index, June sales were still down by 0.1 per cent.

Ewan Macdonald-russell, the SRC’S 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. Grocery sales were up 4.2 per cent this month and over 12 months recorded their fastest growth since April 2014.”

However, he noted growth resulting from the fall in the value of sterling, adding: “Our concern is inflation on essential goods is now forcing cashstrapped 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.”

Craig Cavin, KPMG’S head of retail in Scotland, also pointed out that Scottish retail’s battle continued in June.

“The drop in non-food sales… 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.

“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.”