THE value of Scottish retail sales last month was down on a year earlier, as the steepest drop in the non-food category since 2012 outweighed an inflation-fuelled rise in the grocery sector, industry figures reveal.
The survey, published today by the Scottish Retail Consortium (SRC), highlights the pressure on households as they deal with a renewed fall in real pay caused by a surge in inflation resulting from sterling’s post-Brexit vote tumble.
Official figures published yesterday showed annual UK consumer prices index inflation remained stuck at a five-year high of three per cent in October, way above the two per cent target set for the Bank of England by the Treasury. The data highlighted upward pressure on food prices, with sterling’s weakness having raised the cost of imports.
Annual UK CPI inflation was just 0.3 per cent in May last year, ahead of the Brexit vote.
The SRC survey shows the value of Scottish retail sales in October was down by 0.8 per cent on the same month of last year.
The value of non-food sales, the category that reflects more discretionary consumer spending, was in October down by 5.2 per cent on the same month of last year.
The SRC noted this was the worst year-on-year fall in the value of non-food sales since January 2012.
And it flagged weakness in the clothing and electrical categories.
Driven by inflation, the value of food sales in Scotland last month was up by 4.9 per cent on October 2016.
Figures published by the British Retail Consortium earlier this month showed the value of retail sales in the UK as a whole last month was up 0.2 per cent on October 2016. This represented a dramatic slowdown in year-on-year growth in UK retail sales value from 2.3 per cent in September, against the difficult consumer backdrop.
The SRC has highlighted the boost to overall UK retail sales in recent years from a stronger economic and housing market performance in London and south-east England.
Ewan MacDonald-Russell, head of policy and external affairs at the SRC, said of the latest Scottish numbers: “Hallowe’en wasn’t enough to stave off hard times on the high street for non-food retailers, who suffered the most challenging month’s performance in [more than] five years. Overall, even continued strong food sales weren’t enough to rescue October’s figures.
“The gap between grocery and non-food sales continues to grow. Food sales are still relatively strong, although still partially being driven by inflation. However, on the high street there will be less optimism, with clothing and electrical lines struggling in October.”
He declared this month would be crucial for high street retailers, “with promotions around Black Friday likely to be integral to sales success for some in the crucial Christmas shopping period”.
He added: “Those retailers will face a tough act balancing giving customers the best deals to stimulate sales whilst not forfeiting margins already eroded by higher costs.”
Craig Cavin, head of retail in Scotland for accountancy firm KPMG, said: “Retailers will be disappointed with October’s figures showing a 5.2 per cent decline in non-food sales and marking the largest fall since 2012. Unseasonably mild weather, coupled with Black Friday looming and limited promotional activity in October, meant retailers failed to persuade customers to open their wallets.”
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