Plunge in shop sales

Retail stores suffer from storm-hit Scotland

Princes St shoppingStormy weather in January kept shoppers away from the high street, leading to a 3.8% plunge in sales.

Adjusted for deflation measured by the BRC-Nielsen Shop Price Index (SPI), total Scottish sales decreased by 2%.

Food sales were 5.8% down on January 2015.

David McCorquodale, head of retail at KPMG, said: “Storms battered the Scottish high streets in January, resulting in the weakest performance for some time and a washout to start 2016.

“With the month producing 145% of average rainfall and only 63% of average sunshine, it was one of the wettest and dullest Januarys for a century.  As a consequence, total sales were down by 3.8% compared with last year.

“Food sales were particularly badly hit, falling by 5.8%.  Having enjoyed one of its best months for a couple of years in December, the grocers will be hoping figures for January were a consequence of the deluge rather than the post-Christmas diet.  Even with the benefit of adjusting for the effect of online sales, the weather put the brakes on recent growth in non-food sales, which increased by only 0.2%.

“With an election looming and ongoing challenges in the oil and gas industry, the Scottish retail sector will be looking to the Government to find ways to encourage consumer confidence and to alleviate unnecessary burdens on retailers.  They will also be hoping the latest sales decline was genuinely weather related rather than consumer malaise.

David Lonsdale, Director of the Scottish Retail Consortium, said: “There is no denying that these are dour retail sales figures for January, showing a decline of 2% even once falling shop price inflation is taken into account.

“After the excess of the festive period, which saw solid retail sales growth in December, shoppers were clearly keeping a firm grip on purse strings and wallets in January even as footfall improved.

“Food sales plunged last month, albeit after a strong showing the previous month, and at a faster rate than the 3-month average. The total year-on-year change of retail sales of non-food items dipped too.

“However, after taking account of the trend for online purchasing and discounting by retailers to shift stock, non-food sales remained positive. In fact, the 3-month trend for online adjusted non-food achieved its best performance since September 2015. Other non-food was the best performing category from an otherwise drab overall set of figures, with sales of larger furniture items holding up well. Clothing and footwear followed closely, with winter clothing, boots and sport shoes amongst the stand out performers during the month.

“With the Chancellor’s Budget just a month away and the publication of the Holyrood election manifestos almost upon us, Scotland’s retailers will be looking for measures which will further improve consumer confidence, boost disposable incomes and keep down the cost of living. With half of VAT receipts being assigned to the Scottish Parliament our politicians at Holyrood have a direct stake in facilitating a flourishing retail industry.”

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