Scotland's high streets endure worst slump for 10 years

HOPES of a recovery in Scotland's high streets have been dashed by figures which reveal the biggest slump in sales for more than a decade.

The Scottish Retail Consortium-KPMG Scottish Retail Sales Monitor found total sales values in May were 1.1 per cent smaller than in the same month last year, the biggest drop since 1999, the year the survey began.

The report noted that the increased business recorded in April, attributed to the warm weather and the extra bank holiday, was merely "a blip" in the downward trend.

Fiona Moriarty, director of the Scottish Retail Consortium (SRC), said: "After the combination of unusually sunny weather, Easter and the extra bank holiday in April which boosted spending, this is a return to reality for Scottish retailers.

"It's clear that April's good figures were a blip, with May producing the worst fall in total sales values since we began this survey in 1999.

"People remain nervous about the economy and their personal finances.

"Non-food sales in particular are struggling and shoppers don't have the confidence to spend on big-ticket items.

"Customers who bought summer shoes and clothing during the heat of April have reined back their spending and turned to their winter wardrobes again during the May wash-out.

"The tough outlook for the high street means shoppers stand to benefit from increased competition and plenty of special offers, but the outlook for retailers remains challenging."

Senior SNP MSP John Wilson, the deputy convenor of the Holyrood's economy committee, said that Scottish shoppers were tightening their belts and were "cautious" about spending due to soaring fuel bills and the impact of what he said were UK government-imposed cuts.

The sales survey released by the SRC today came just a month after April's figures showed that Scotland's total retail sales were up 5.5 per cent on the same month last year.

The 1.1 per cent drop in sales during May was only the second fall since 1999, Scotland's only other decline in sales being a 0.3 per cent slump this March.

There was a stark warning from a leading Scottish retail expert, who predicted a "tough road ahead" for the nation's high street traders, who he said would not be saved by a "long hot summer".

David McCorquodale, KPMG's head of retail in Scotland, said: "I fear a tough road ahead for the remainder of the year where more than a long, hot summer is required."

CBI Scotland's assistant director, David Lonsdale, said: "Household budgets are being persistently squeezed due to price inflation and weak wage growth.

"These findings mirror the results of our own recent retail survey, which found high-street sales subdued and likely to remain sluggish for some time to come."

Andrew Turnbull, a senior lecturer in retail marketing at Aberdeen's Robert Gordon University, said that the recovery on Scotland's high streets was likely to remain slow.

He said: "The main issue is that confidence is not high at the moment, with people concerned about their employment prospects.

"We're not seeing much in the way of recovery and retail tends to dive with the way the rest of the economy performs.

"How sales go in the summer could be weather permitting, but it's fair to say that while things might not be disastrous they won't be exciting either."

Mr Wilson said "hard-pressed" Scots were being affected by the pressure of increased costs such as ScottishPower's recently- announced fuel price hike of 19 per cent for gas bills and 10 per cent for electricity.

He said: "The figures released about Scotland's retail sector are alarming and clearly indicate that people are being cautious about their spending habits.

"People are having to make difficult choices about either paying their energy bills and other necessities.

"The uncertainty of the UK economy and the UK Government's policy of imposing cuts is impacting on hard-pressed households, when it comes to consumer spending.

"Households will be under a greater strain financially because of all this."

Senior Tory MSP Gavin Brown seized on the figures to warn the SNP Government against bringing back its controversial supermarket tax, which was thrown out during the last parliament.

Mr Brown, who is his party's finance spokesman at Holyrood, said: "The government should rule out the prospect of reintroducing the tax."

A Scottish Government spokesman said: "These figures underline the importance of the council tax freeze in boosting demand in local economies and the employment security we're delivering to enhance consumer confidence.

"We have no plans to introduce a large retailers levy."