Retail sales down 1.8% in December

A dip in sales in December rounded off a 'testing' year for many retailers, a new SRC KPMG report has found. Picture: Scott Louden

Overall sales were 1.8 per cent lower in December compared to the same month of the previous year.

Total food sales fell 1.9 per cent from a year ago even though the sector was boosted by purchases of Christmas-related products.

Clothing and footwear was the best performing category for the month, helped by shoppers buying party-wear for festive celebrations.

The analysis contained in the SRC KPMG Retail Sales Monitor revealed total like-for-like sales, which strip out factors such as new store openings, decreased by 2.6 per cent on December 2013. But, when adjusted for deflation, total Scottish sales decreased by 0.2 per cent.

Total non-food sales were 1.8 per cent down on the previous year but taking into account the estimated effect of online sales, they would have decreased by 0.5 per cent.

David Lonsdale, director of the Scottish Retail Consortium, said: “Even adjusted for shop prices which are falling at the moment, the small decrease in sales in December is unfortunate and rounds off what was a testing 2014 for many in the industry.

“Consumers remain cautious and the surge in online sales at the time of Black Friday in late November clearly had the impact of pulling sales forward, particularly from the early part of last month.

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“There were some categories where the news was better than others. Clothing was the stand out performer, doing well as consumers bought festive-period related party wear and fancy dress, or updated their wardrobes with seasonal ranges often in response to retailers’ promotional activities.

“Whilst the overall performance of non-food slipped, the decline in food sales was less marked, turning in its best performance since August and helped by purchases of Christmas related fare.

“This all points to a continuing fragility in the recovery. Holyrood is set to exert significant influence over take home pay and disposable incomes later this year when it begins setting income tax rates and when the First Minister’s alternative to council tax is unveiled.

“It is absolutely imperative that these decisions on personal levels of taxation, and therefore the amount of money in people’s pockets, are ones which support consumer spending and economic recovery.”

David McCorquodale, head of retail at KPMG, said there were some positives amongst “the sea of negative sales figures”.

“Firstly, the sale windows of Black Friday and post-Christmas saw consumers flock for a discount and this helped to raise the three-month average for non-food sales (adjusted for online) to show growth of 0.7 per cent - demonstrating the significant role Black Friday played this Christmas,” he said.

“Coupled with retail performance throughout the traditional Boxing Day sales, the statistics reflect how consumers today need a bargain before committing to spend. The true cost at margin level to the retailer will only surface as the campaigns wind down.

“Secondly, at the risk of heralding ‘less negative’ as a success, the decline in food sales in December was less than previous months, which will make the grocers feel their Christmas campaigns hit the mark and persuaded consumers to put some of their fuel and petrol savings towards a savoury treat.

“As 2015 begins, retailers will gear up for another year of investment in systems, protection of margin and a determined effort to meet ever-increasing consumer demands.”

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