Scottish sales drop with more uncertainty for consumers

Scottish sales in February saw a 0.8% drop compared to last year with more uncertainty for consumers in the months ahead.

According to the SRC-KPMG Scottish Retail Sales Monitor, total sales in Scotland decreased by 0.1% whereas in February 2018 they had increased by 0.7% – with the figure below the three-month (0.3%) and 12-month (0.4%) averages.

While food sales were up 2.6% on the previous year, non-food sales dropped 2.3% with Valentine’s Day even failing to spark life into figures for clothing and fragrances.

Ewan MacDonald Russell, SRC head of policy and external affairs, warned consumers north of the border were not only cautious because of Brexit uncertainty – but also the consequences of the recent Scottish Budget.

He said: “It was a dreich February for Scottish retailers as sales fell back with a real terms fall of 0.8%. That’s below the quarterly and annual trends and shows a pattern of slowing sales as economic pressures cut into consumer spending.

“Food sales continue to show growth, albeit that’s still as much a consequence of food price inflation of 1.6%.

“However, that growth was more than offset by further decline in non-food sales, with discretionary products performing particularly poorly.

“Even romance associated with St Valentine’s Day wasn’t enough to encourage consumers into stores, with clothing and fragrance sales weak.

“Our concern is the drumbeat of negative political news is influencing shoppers’ decisions.

“Between Brexit uncertainty and news of further taxes and levies in the Scottish budget accord; consumers are understandably cautious about committing to spending.

“Politicians from all parties should be careful to keep their language temperate in coming weeks, and in particular, come together to thrash out a deal to avoid the risks of a disorderly exit from the EU.

“Doing so would be a positive step which should help to reassure nervous customers.”

Adjusted for the estimated effect of sales online, the total non-food sales for last month decreased by 0.6%.

Paul Martin, UK head of retail at KPMG, said: “Scottish retail figures recovered slightly in January, but it wasn’t to last, with like-for-like sales falling 0.8% in February compared to last year.

“Consumer spending has remained relatively resilient until now, but it appears ongoing political and economic uncertainty may be affecting shoppers’ spending habits.

“Scotland’s high streets were not feeling the love this February, with Valentine’s Day having less of an impact on sales than previous years, and while food sales grew slightly – 1% taking into account inflation – this was below the 12-month average.

“Non-food sales fell in February and while this trend is nothing new, retailers will have to continue treading the fine line between generating sales and keeping costs down.”

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