High street gloom as falling sales set alarm bells ringing

SHOPS in Scotland suffered their biggest fall in sales for more than a decade last month, new figures reveal today.

A glimmer of hope offered by yesterday’s falling inflation rate was offset by more gloom on Scotland’s high streets, where there has been a 1.5 per cent drop in sales for January compared with a year ago.

The fall is disclosed in the latest monthly retail sales monitor by the Scottish Retail Consortium (SRC), which examines traditional shopping patterns and excludes most goods bought over the internet.

Hide Ad
Hide Ad

The SRC report, published today, said the fall was the largest in total sales since 1999 and experts said the figures would “set alarm bells ringing” for retailers.

Opposition politicians called on Alex Salmond’s government to ditch its plans for a retail levy that it proposes to raise on outlets selling alcohol and tobacco, arguing that it would harm businesses further.

The SRC said consumer confidence in Scotland remained lower than the UK as a whole, with sales falling faster than anywhere else in the UK.

Discounts and clearance sales in January failed to overcome consumer caution, with non-food sales showing the biggest fall since the survey began in 1999.

The poor non-food sales, which contracted by 5.5 per cent, outweighed the more encouraging food sales, which grew by 2.8 per cent since last year. According to the report, overall total sales in January were 1.5 per cent down on January 2011, when they had increased 1.9 per cent.

Like-for-like sales, the percentage change in the value of comparable sales compared with the same period a year earlier, were 2.6 per cent lower than a year ago. January’s fall was the worst since May 2011 and the ninth decline in the past 12 months.

SRC director Ian Shearer said: “A sales decline on this scale sets alarm bells ringing for Scottish retailers.

“Combined, as it is, with some above-inflation cost pressures, there are potentially worrying implications for Scotland’s largest private-sector employer.”

Hide Ad
Hide Ad

As in the UK results, both like-for-like and total sales worsened in January after a better December. By both measures, sales fell more quickly in Scotland than elsewhere.

Mr Shearer added: “Customers have confronted reality again since Christmas. Consumer confidence remains low, Scottish household incomes are being squeezed by increased utility and fuel prices, and continued fears over job prospects and the wider economy are front-of-mind for many – deterring purchases which are not immediate needs. The comparison with a year ago, when there was a final burst of pre-VAT-rise spending, is also not helping this year’s figures.

“The biggest year-on-year drop in overall sales in over a decade is a sign of troubled times for retail.”

The figures led to Conservative finance spokesman Gavin Brown calling for an end to the SNP’s retail levy, the controversial measure which its critics have labelled the “Tesco Tax”.

Mr Brown said: “These figures demonstrate the fragility of the retail sector.

“The Scottish Government should be doing everything in its power to assist the sector. The very last thing we need is a Scotland-only retail tax which could harm investment, cost jobs and make us less competitive than the rest of the UK.

“I am calling on the Scottish Government, even at this late stage, to abandon their ill-thought-out retail levy.”  

Leigh Sparks, professor of retail studies at Stirling University, said the figures showed a “downward spiral”.

Hide Ad
Hide Ad

“It is looking bad and there is no sense of how things might get better,” he said. “There are more sales going on to the internet, so perhaps there is an effect there that is not being shown in the figures.”

A Scottish Government spokeswoman said: “These figures offer a partial account of the performance of the retail sector in Scotland, and there is no doubt that circumstances remain difficult due to a lack of growth in the UK economy.

“The official Retail Sales Index provides a more robust measure of retail activity in Scotland, and shows that both the volume and value of retail sales increased in the fourth quarter of 2011.”