Significant Decline for Scottish Food Sales

Scottish retail sales have dropped again with total sales in October down 0.1% on October 2010, when they increased 1.4%.

Sales have now shown a decline in three of the last six months. Like-for-like sales were 1.5% lower than a year ago, the fifth decline in the past six months. Food sales showed their largest year-on-year decline since June, on a like-for-like basis.

Non-food sales also worsened and have been down on a year ago every month but one so far this year. Clothing, footwear, furniture and homewares all suffered. Big-ticket and discretionary purchases were largely deal-driven, hit by fragile consumer confidence.

As in the UK, both like-for-like and total sales were worse than in September. Consumer confidence weakened more in Scotland than in the UK and remains below that in the UK.

Ian Shearer, Scottish Retail Consortium director, said: "Retailers are still hoping for some festive magic but these gloomy figures are not a good start to the Christmas build-up.

"Non-food retailing continues to struggle as customers cut back on things they don't need immediately, but food sales have been hit too. In October, total food sales grew at their slowest rate since April 2004, showing people are reducing spending across the board.

"And life is tougher for retailers in Scotland because households here are generally more concerned about personal finances, jobs and cuts.

"Scottish consumer confidence is lower and falling faster than elsewhere and retail sales have now performed worse than the rest of the UK for most of this year.

"These figures should tell the Scottish Government that retailers cannot be regarded as an invulnerable cash cow. It should not add the 5.6 per cent inflation increase to business rates bills next April. No-one is seeing sales or profits rise on that scale.

"And it cannot expect to impose a supermarket tax without effect, when it would increase the rates of affected stores by a further 22 per cent."

David McCorquodale, head of retail in Scotland, KPMG, said: "Total sales for October are down by 0.1 per cent on last year and it's also the third time in the last six months we have seen a drop in total sales.

"Given the rises in inflation and VAT since last year, which should positively impact the figures, the drop reflects the lower footfall and volumes on our high streets.

"With so much uncertainty around employment, family budgets and world markets it is no surprise that Scottish consumers remain reticent as their personal finances become harder to manage.

"From the point of view of the retailers, who employ around 9 per cent of the Scottish workforce, to whatever extent sales are being made, margins and therefore profits and cash flows are being impacted to stimulate demand.

"The success of the Christmas season for retailers hangs in the balance as October's results do not set a strong foundation."

More retail news from Scotland.