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Online sales rescue retailers

Shoppers spurn high street as ‘north-south’ divide opens

shoppingScotland’s retailers saw a downturn in sales last month amid claims that it indicates a growing ‘north-south’ divide in consumer confidence.

Total sales in June were down 1.7% on a year ago and on a like-for-like basis by 2.2%. Wetter weather contributed to the decline, the figures compare unfavourably on a month-by-month basis. Total sales for the UK were up 2.9% and like-for-like sales rose by 1.8%.

Online buyers helped prop up retailers with the best figures since November and reflect the preference for weather-hit Scots to shop from their own home or from the office.

David Martin, head of policy and external affairs at the Scottish Retail Consortium, said: “Online purchases really drove non-food sales in June, with the best performance for over 6 months.

“Travel products also sold well as consumers stocked up on holiday essentials preparing their escape from a cool and overcast Scotland for warmer and sunnier climes.

“Although non-food purchases performed comparatively better in June, consumer confidence slipped back in Scotland, opening up a significant gap in confidence north and south.

“Retailers will be hoping that some of the measures outlined by the Chancellor in his budget earlier this month will help to close this gap as households start to feel the benefit of measures like the continued freeze in fuel duty and increased personal tax allowance.

David McCorquodale, head of retail at KPMG which compiles the figures for the SRC, said:  “The bright spots were in the home categories, where bigger ticket sales were welcomed, and in health and beauty as consumers stocked up for travelling to the sunshine.

“After a poor May, fashion sales did better in June but clothing retailers will be looking for a more sustained period of warm weather to bring a strong close to the summer season.”

Grocery sales continue to decline at a greater rate than the rest of the UK and he noted that forthcoming figures will be compared with sales during last year’s sporting events when the country was flooded with visitors.

Even so, he warned that  “the road to recovery in this segment continues to be hard.  With many positive economic indicators emanating around employment, wages and housing, Scottish retailers will be keen to see these working their way to the High Street before they themselves face the increased costs introduced by the Summer Budget.”

Definitions

Total sales growth is the percentage change in the value of all sales compared with the same period a year earlier. The total sales measure is used to assess market level trends in retail sales. It is a guide to the growth of the whole retail industry, or how much consumers in total are spending in retail – retail spending represents approximately one-third of consumer spending. It is this measure that is often used by economists.

‘Like-for-like’ sales growth (LFL) is the percentage change in the value of comparable sales compared with the same period a year earlier. It excludes any spending in stores that opened or closed in the intervening year, thus stripping out the effect on sales of changes in floorspace. Many retailers include distance sales as a component of like-for-like comparable sales.

The like-for-like measure is often used by retailers, the city and analysts to assess the performance of individual companies, retail sectors and the industry overall, without the distorting effect of changes in floorspace.

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