Retail sales healthy but doubts remain on strength of recovery

Published on Tuesday 17 November 2009 20:52

SCOTTISH shoppers continued to beat a trail to the high street last month, a key industry report today reveals, although "big doubts" remain over a sustained recovery.

According to the Scottish Retail Consortium (SRC), there was a 1.5 per cent increase in like-for-like sales in October, matching September's year-on-year rise.

Total sales, including new store openings and extensions, rose 4.9 per cent on a year ago.

Consumers snapped up homewares and furniture as a degree of confidence returned to the housing market, but clothing and footwear sales remained subdued, the SRC said. Food sales growth was only marginally up on the previous month.

Although October's like-for-like growth trails the UK as a whole, the report suggested, "Scottish customers are regaining the spending habit".

Richard Dodd, SRC head of media, said: "While October's sales growth figures are higher for the UK than Scotland, the UK results are compared with dismal performances a year ago when sales were falling.

"By contrast, Scotland was turning in decent, positive sales last autumn which are being more than matched now."

However, there was a warning over the pace of recovery in 2010 as value added tax (VAT) returns to a higher rate, public spending is curbed after the general election and unemployment looks likely to go on rising.

Experts also point to the impact of soaring fuel costs, which have underpinned the latest rise in consumer price inflation. Higher prices at the pumps will provide a double whammy, hitting the cost of goods in the shops and squeezing fragile household budgets.

David McCorquodale, head of retail in Scotland for KPMG, which helps produce the monthly retail sales monitor, said: "The looming VAT rise and potential tax increases in next month's pre-budget report will mean retailers approach Christmas nervously."

Dodd warned that "big doubts hang over 2010".

The report's findings echo those of BDO, the accountancy firm that monitors sales at 10,000 stores across the UK.

On Monday, it said retailers could expect a stronger Christmas but cautioned that new year trading would be "ugly".

The SRC survey highlighted buoyant sales of "confectionery treats, pumpkins, sausages and burgers" after stronger Halloween trading than last year.