Price wars as shoppers get bargain habit

THE Scottish high street continued to struggle in June as cost conscious shoppers forced retailers to cut their prices.

SRC director David Lonsdale said consumers were increasingly confident, but bargain-hunting had become a habit. Picture: PA

The latest figures from the Scottish Retail Consortium (SRC), published today, show sales dropped by 1.1 per cent year on year, with all of it due to shop price deflation.

SRC director David Lonsdale said consumers were increasingly confident, but bargain-hunting had become a habit. He said: “Despite June’s retail figures showing a slight improvement on the previous month, they rounded off a disappointingly weak second quarter.

“Warmer weather at the start of the month helped to get shoppers out, but as the weather cooled down so did sales.

“It is clear that cash-conscious consumers have grown comfortable with value, especially on food, and continue to benefit from competitive pricing driven by stiff competition between the major grocery retailers. The continued decline in like-for-like food sales in June is suggestive that last month wasn’t any different.”

On a like-for-like basis, food sales were down 3.3 per cent, or 1.4 per cent in total. The category was helped by World Cup themed deals, but was up against a tough comparable period in June 2013, when very warm weather and Andy Murray’s progression in Wimbledon helped support sales Total like-for-like sales decreased by 2.6 per cent compared to June 2013.

But the SRC said that, taking account of shop price deflation, June’s total sales were up 0.7 per cent in real terms, the highest real-term growth this year after January and Easter.

Some retailers reported that warmer weather near the beginning of June favoured sales, which slowed when the cooler weather advanced.

Adjusting for the estimated effect of online sales in Scotland, the SRC said total non-food sales increased by 0.5 per cent.

Lonsdale said: “Despite a slight set back in consumer confidence in June, overall consumer confidence has rebounded significantly throughout 2014 and where consumers have made savings, they now have the confidence to loosen their belts and increase spending on those discretionary non-food items.

“Fashion continues to benefit from this confidence, with clothing and footwear the best performing category in June and the only category to report positive total sales growth now for two consecutive months.”

But David McCorquodale, head of retail at accountancy firm KPMG, said that what consumers saved in “the battle of the grocers” was not necessarily being recycled into the non-food categories. “The decline in food sales in Scotland is similar to that in the rest of the UK and is more reflective of price reductions from the grocers as they battle for share of wallet than significant volume shifts,” he said.

He said that the months ahead would be key when it came to injecting confidence in the economic recovery, which could then translate through the tills.