'Reality check' for Scottish retailers as sales growth slumps

Published on Tuesday 19 August 2008 21:09

SCOTLAND'S shops received a "reality check" in July according to the Scottish Retail Consortium (SRC), which today reveals like-for-like sales grew by only 0.5 per cent last month.

Although sales growth in Scotland remained stronger than in the UK as a whole – which reported a 0.9 per cent drop in like-for-like sales – last month's sales were much weaker than in May or June.

When annual inflation in shop prices was stripped out, the SRC said the retail sales figures for July represented a decline in real terms, including in food sales, where inflation is said to be running at around 5 per cent.

Changeable weather and the squeeze on household budgets hit footfall in shops, according to the SRC's retail sales monitor.

Scotland's total sales growth stood at 6.2 per cent, all of which was attributed to the food sector, with higher commodity costs forcing up retail prices.

The SRC said non-food sales were down on a year ago, the worst decline since June 2000, despite continued heavy discounting especially for household goods.

Non-food like-for-like sales fell by 3.7 per cent when compared with July 2007.

Fiona Moriarty, director of the Scottish Retail Consortium, said: "Sales of non-food goods fell faster than they have since 2000 as Scottish consumer confidence, previously more resilient, slipped closer to levels elsewhere in the UK.

"After significantly outperforming other parts of the UK all year, this is a reality check for Scottish customers and retailers. These results show marked belt-tightening now extending to Scotland as Scottish shoppers begin to rein in their spending.

"Despite retailers offering some of the strongest discounts and promotions in recent history, customers are confining spending to essentials with clothing, homewares and DIY retailers the worst hit."

Cheaper clothing lines and fashion ranges for younger people sold better than middle-market brands, while there was some interest in new-season transitional ranges.

Changeable weather and restricted budgets meant shoppers often did not want more summer clothes – having already bought during May's sunny weather – and only heavy discounts tempted them to buy, the SRC said.

Any growth in the footwear sector was driven by special promotions, the SRC noted, particularly with end-of-season clearances of sandals.

In the health and beauty sector, sun care and bronzing products made gains but skincare and fragrances did less well.

Gains in seasonal food products – such as salads, ice-cream and barbecue foods – were often limited to the few sunny days, the SRC said.