By Maximilian Clarke
Scottish retailers suffered a 1.3% drop in November- the worst such drop since the Scottish Retail Consortium’s index began in 1999- as employment uncertainty undermined sales of clothing and footwear in particular.
Food sales showed only a marginal improvement. Despite widespread promotions, non-food sales suffered their largest year-on-year decline, on a total sales basis, since May 2009.
Clothing and footwear sales were hit by underlying uncertainty about jobs and incomes, as well as by the mild weather. Consumer caution continued to hit big-ticket homewares and furniture purchases most.
As in the UK, both like-for-like and total sales were markedly worse than in October. Consumer confidence picked up only slightly in both, and that in Scotland remains below that in the UK.
"This is the biggest fall in total sales we've seen since we started this survey in 1999. This performance is particularly troubling in the run-up to Christmas,” says Ian Shearer, Scottish Retail Consortium Director.
"Retailers in Scotland have had an exceptionally tough year, worse than the UK as a whole. Consumer confidence is currently lower in Scotland than the UK average and householders are more worried about jobs and the state of their personal finances. Mild weather continuing into November added to the woes of clothing and footwear retailers who struggled to sell winter ranges, and seems to have led people to begin their seasonal shopping later than a year ago.
"Retailers are hoping that people have been saving and will ultimately treat themselves for Christmas. There are signs that significant Christmas shopping was under way this weekend, although margins are being cut to the bone with many stores offering high levels of discounting. In the end, Christmas should deliver some much-needed cheer to retailers in Scotland but they'll be worried about consumers tightening their belts again in the New Year. With no immediate hope of an upturn and damaging increases in business rates on the horizon, the start of 2012 will be a make-or-break period for some retailers."
David McCorquodale, Head of Retail in Scotland, KPMG, added: "The further decline in both total sales and like-for-like sales shows once more that the health of Scottish retailing is deteriorating.
"Christmas is a crucial trading period for the retail sector but this year many retailers will be nervous and unsure as to how the season will pan out. It was hoped that cash-strapped consumers might look to spread the cost of Christmas over a period of two to three months, but the sales figures do not reflect that.
"Any sales are hard won, with high discount and promotion levels. Retailers' performance is suffering because of weak top-line growth and declining margins, making the backdrop even more challenging. For many retailers, December is a balance of hope that consumers find some festive release balanced with being prepared to make tough decisions to plot a path in such challenging conditions."
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