Retail sales weaker in Scotland than in the UK as a whole

Last week, the British Retail Consortium reported that the value of UK retail sales in November was up by 2.2 per cent on the same month of last year.

The latest Scottish survey continues a pattern of significantly weaker year-on-year movements in sales value north of the Border than in the UK as a whole. SRC director David Lonsdale recently cited stronger economic growth and a sharper rise in house prices in other parts of the UK, notably London and south-east England, as possible reasons for the weaker retail sales performance in Scotland.

David McCorquodale, the Edinburgh-based head of SRC survey sponsor and accountancy firm KPMG's UK retail sector practice, highlighted the pressure on retailers at a time of stretched household finances.

He also flagged the likely impact of heavy discounting during the Black Friday shopping frenzy at the end of November, a US tradition adopted by the UK, on Scottish retailers' profit margins.

Unseasonably mild weather last month meanwhile affected clothing retailers by dampening demand for winter ranges.

And the grocery sector continued to struggle, as households which have suffered years of falling real incomes continued to watch the purse strings.

The SRC survey shows that the value of food sales in Scotland in November was down 2.3 per cent on the same month of last year.

Mr McCorquodale said: "The weather and consumer behaviour is piling pressure on retailers to deliver Christmas cheer. The decline in November sales shows how hard retail has to fight for share of [the] family wallet."

He added: "With mild weather continuing in November and consumers opting to wait for a bargain before spending, fashion retailers used Black Friday as an outlet to reduce prices, drive volumes and clear stocks. Originally seen as an American gimmick, Black Friday is now fixed in the retail calendar and is being used tactically to drive volume - but at what cost to margin?"

Mr McCorquodale and Mr Lonsdale highlighted demand for furniture and household appliances as bright spots in the Scottish retail landscape in November.

Mr Lonsdale said: "The welcome rise in Scottish footfall last month didn't lead to a commensurate increase in the actual total value of retail sales in shops."

The value of non-food sales in Scotland in November was down 0.7 per cent on the same month of last year, according to the SRC survey.

However, based on figures for the UK as a whole, the SRC estimated that the value of non-food sales in Scotland would have been up by a rounded 0.9 per cent year-on-year in November if the figures had been adjusted for the impact of online sales.

Mr Lonsdale meanwhile cited figures from the BRC earlier this month showing that UK shop prices in November were, overall, down by 1.9 per cent on the same month of last year.

He calculated that, based on this figure, the volume of Scottish retail sales in November would have been up by about a rounded 0.4 per cent on the same month of last year.

Mr Lonsdale said: "Once the effects of shop price inflation are taken into account...retail sales in Scotland did grow, edging up by 0.4 per cent."

He added: "The bright spots once again were items such as furniture and household appliances, which recorded their best performance since January, with gaming and beauty products also doing well, driven by early demand ahead of the festive season."

Mr Lonsdale took some comfort from the extrapolation of the UK online sales figures to Scotland.

He said: "Once again, online sales, with double-digit [percentage] growth recorded on and around Black Friday at the end of last month, dragged the overall non-food category into healthy territory which recorded [year-on-year] growth of 0.9 per cent."

However, he highlighted pressure on the grocery sector and acknowledged weakness in other product categories in November.

Mr Lonsdale said: "Food sales continued to disappoint, although retailers noticed early evidence of speciality food items being purchased particularly towards the end of last month, which are likely to be Christmas-related purchases."

He added: "With fierce competition and promotions pushing shop-price inflation to new lows, retailers will be hoping for some Christmas cheer with a far stronger showing across a wider range of product categories in December, in what is after all the most important trading period of the year."

Mr McCorquodale said: "Volume spikes from promotional days has put pressure on websites and logistics companies, leaving consumers fretting for Christmas deliveries and retailers facing more investment to adapt during 2015."

On a like-for-like basis, stripping out the beneficial impact of net expansion of space, Scottish retail sales value in November was down 2.6 per cent on a year earlier.