By Daniel Hunter
July 2012 total Scottish sales fell by 0.7% compared with July 2011, which had seen growth of 1.7%. Like-for-like sales decreased by 2.2% on last July, when they had risen by 0.2%.
Total food sales were virtually flat over July 2011 when they had risen by 4.1%. Coming on the back of higher promotions than last year, this performance was disappointing. Taking into account food inflation, it suggests that the average food basket is shrinking.
Total non-food sales declined by 1.5% on a year earlier, despite an improved performance from clothing and footwear. On a like-for-like basis the 3-month average has been in decline since January 2011.
Like-for-like and total retail sales growths remain below the whole of the UK. Like-for-like sales growth in Scotland has lagged the UK every month since the beginning of last year.
Richard Lim, Scottish Retail Consortium Economist, said: "July was not a good month. There's no sign of any pre-Olympic boost for Scottish retail in these figures and cutting back is becoming more widespread. Apart from one Easter-distorted month, food sales performance was the worst since the SRSM began in 1999. Even if people bought party food ahead of the Games, they put fewer other things in their trolleys, leaving food spending virtually the same in cash terms as a year ago.
"Many people have been buying fewer non-food goods and concentrating on must-haves for a long time. As this lengthy period of falling disposable incomes goes on, food spending is coming under extra pressure too, as people search out offers and value. Also, with food inflation at a two-year low and competition intense, price rises are making much less of a contribution to the growth of food sales.
"The bright spot in non-food retail was clothing and footwear. Severe discounting and some cooler weather in July got people buying new Autumn ranges and school uniforms did well but, generally, Scottish retailers continue to scan the horizon for sight of the urgently-needed upturn."
David McCorquodale, Head of Retail in Scotland, KPMG, said: "July was another disappointing month for the Scottish high street with rainfall, particularly in the South and East, keeping any summer revival at bay. Despite heavy promotions from retailers, like-for-like sales in both food and non-food were down by more than 2 per cent on the previous year.
"Total food sales were virtually flat. That's lower than inflation, a real-terms fall, and reflective of continued caution in spending on anything other than necessities. Total non-food sales were down by 1.5 per cent as families grappled with the ongoing effects of unseasonal weather on clothes purchases as well as continuing to avoid committing to buying larger ticket items.
"The lack of any feelgood factor encouraging consumers into the shops has provided a set of figures much more indicative of the true underlying trend. These show weakness in sentiment as disposable incomes remain squeezed, despite the fall in headline inflation. It's a real challenge for retailers to grow sales and many are only achieving this at the expense of margins.
"Time will tell what uplift came from a fantastic Olympic games but the eventual arrival of summer weather may be too late with schools back in the next two weeks."
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