By Maximilian Clarke
A slight increase in retail sales over December has not been enough to reverse what has been a ‘harsh’ year for Scottish retailers, Scottish Retail Consortium figures show.
Food sales growth picked up but was still the worst for any December since 1999. Non-food also strengthened, led by clothing and footwear where discounting was particularly aggressive. Promotions and clearance markdowns also helped homewares and furniture. But consumer uncertainty about jobs and incomes continued to favour essentials and replacements over discretionary purchases.
As in the UK results, both like-for-like and total sales improved in December from the previous month. Consumer confidence fell more in Scotland than in the whole of the UK, where sales improved more.
"December wasn't the saviour of a consistently harsh year for Scottish retailers,” comments Ian Shearer, Scottish Retail Consortium Director. “Sales growth revived to its highest since July but this still represented a real terms fall once inflation is allowed for. The Christmas boost was well below both what Scottish retailers hoped for and the UK-wide figures. It came largely from a last-minute surge in the week before Christmas, helped by discounts and the shopping opportunity presented by the Saturday Christmas Eve.
"People did buy food and drink treats but compensated by cutting back on other things. Clothing had a better month, driven by clearances and the eventual turn to colder weather but most other non-food goods struggled.
"Consumer confidence is lower and falling faster in Scotland than at UK level as fears about incomes, jobs and the wider economy continue. With annual sales growth averaging just 0.8 per cent across 2011, compared with 2.3 per cent in 2010, Scottish retailers' contribution to jobs and investment is under threat. In this tough climate, it's even more important that the Government minimises the costs it's responsible for, including business rates, retail levies and the burden of regulation."
David McCorquodale, Head of Retail in Scotland, KPMG, adds:
"A slight uplift of 0.4 per cent in like-for-like sales appears to have brought some cheer at the end of what has been a wretched year for retailers. However, we should not forget that for two weeks of December last year the country was under a hefty blanket of snow and, with Christmas falling on a Saturday that year, there wasn't a full week's trading during that critical period. As a result this slight uplift in like-for-like sales is illusory.
"Christmas this year came at a real cost to retailers as the discounting was deep, impacting margins, and opening hours were longer, costing more in wages. Several retailers have not made it into the New Year and more shop closures are anticipated in the coming months.
"With consumer confidence no better than during the recession, the outlook remains difficult and retailers will continue to focus on cash management, stock control and on working with their supply chains."