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End of year trading figures

Christmas adds flourish to ‘tepid’ retail year

Black Friday: pulled sales forward (photo by Terry Murden)

Scottish retailers enjoyed a “final flourish” over the Christmas trading period, though it came at the end of a “pretty tepid” year, says the industry’s spokesman.

Adjusted for falling shop prices, total retail sales increased by 1.4% helped by last minute festive purchases and more discounting than in previous years.

It meant the final month of the year ended on an optimistic note for retailers, even with Black Friday in November pulling sales forward from the early part of last month.

David Lonsdale, director of the Scottish Retail Consortium, said: “These positive results for December provided a final flourish to what was otherwise a pretty tepid 2017 for Scottish retailers.

“The polarisation between the performances of grocery and non-food retail sales continued, although it was less pronounced than of late.

“Clothing and footwear were the stand out performers, driven by online promotions, especially of branded items, trainers and children’s shoes. Gaming and voice-activated gadgets did well, whilst toys, furniture and household appliances flagged.

“Grocery sales maintained their strong run of late, helped by customers stocking up for Christmas and with evidence of trading up to more premium items.”

Mr Lonsdale added that retail is “an industry in transition”, with retailers navigating profound changes in shopping habits while cash-conscious customers – challenged by rises in the cost of living – hunt more and more for deals.

“If consumers continue to hold out for discounts this will put real pressure on retailers’ profit margins,” he said.

“The spotlight now turns to the year ahead and whether this welcome uptick in December heralds the start of a more sustained recovery in the growth of total retail sales or a further nail-biting period ahead for Scotland’s shopkeepers.”

Craig Cavin, head of retail in Scotland at KPMG said Storm Caroline and heavy snow did not hamper the festive grocery shop, as food sales spending rose by 4.4% across Scotland.

“While inflation continues to play a significant role in driving this uptick, the latest figures will be welcome news for grocers. In particular, whisky sales enjoyed a festive uplift, with retailers sourcing more Hogmanay food and drink from Scottish suppliers this year.

“Heavy discounting at the expense of reduced margins appeared to pay off for non-food retailers in the short-term in December, with consumers snapping up deals on seasonal clothing lines, prompting a strong finish to 2017. Generous in store discounts could not compete with the lure of online, and footfall was disappointing.

“Adjusting for the effect of online sales, total non-food sales declined by 0.4% compared to the same period in 2016. That said, this was a better performance than the rest of the UK and while retailers must remain cautious, non-food sales ended the year on a note of optimism.

“January typically represents a tough month for retailers, and while buoyed by a strong festive finale, many will face difficult pricing decisions in a bid to persuade traditionally cash-strapped consumers into opening their wallets.”

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