Discounts arrive to kick-start Scottish retail sector

The Scottish Retail Consortium (SRC) - KPMG Scottish Retail Sales Monitor for October 2019 has revealed total sales in Scotland increased by 1.0% compared with October 2018, when they had decreased by 0.2%.

Discounts arrive to kick-start Scottish retail sector

This is above the 3-month average decline of 0.5% and the 12-month average decline of 0.3%. Adjusted for deflation measured at 0.4% by the BRC-Nielsen Shop Price Index (SPI), October sales increased by 1.4%.

David Lonsdale, director of SRC said that this “sprightly’ set of results highlighted a broader increase in demand across the retail sector. He said this was “buoyed by exceptional discounting as retailers’ used ken prices and promotions to successfully drive footfall and demand.”

He said this was particularly seen in winter coats and heavier footwear products.

Mr Lonsdale added that the results also point to the “volatility of retail market conditions at the moment, following a slew of poor months”.

The monitor also highlighted that Scottish sales decreased by 0.1% on a like-for-like basis compared with October 2018, when they had decreased by 0.6%. This is above the 3-month average decrease of 1.2%.

Total food sales increased by 2.5% versus October 2018, when they had increased by 2.3%. This is above the 3-month and 12-month averages of 2.4%. The 3-month and 12-month averages are above the UK’s levels of 1.6%.

The monitor also indicated that total non-food sales decreased by 0.2% in October compared to October 2018, when they had decreased by 2.1%. This is above both the 3-month and 12-month average declines of 2.8% and 2.5% respectively.

Adjusted for the estimated effect of online sales, total non-food sales increased by 1.7% in October versus October 2018, when they increased by 0.1%. This is the best performance since January, excluding Easter distortions. On a 3-month basis, the online-adjusted total non-food sales decreased by 2.0%, below the UK non-food average decrease of 1.8%.

Mr Lonsdale continued: “The non-food category overall recorded its strongest performance for five years. While fashion led the way, beds, home textiles and kitchenware did well, as did sales of mobile phones and televisions. Grocery items fared well too, in line with the average seen over recent months. That said, if customers continue to hold out for steep discounts that will put severe pressure on retailers’ already thin profit margins.

“Overall these figures strike a more optimistic note at the start of the crucial ‘golden quarter’ trading period that leads up to Christmas.

“However, a big question remains over the future direction of consumer spending. The coming weeks and months will be dominated by the general election, Brexit and UK and Scottish budgets. Retailers will be hoping policy-makers keep consumer confidence and household disposable incomes uppermost in their minds.”

Paul Martin, UK head of retail, KPMG, added: “The next few months will be crucial for Scotland’s high streets, as shoppers prepare for the festive spending period. A concerted effort from retailers has laid the foundations for a positive quarter. Naturally, we need to acknowledge the wider political and economic uncertainty, which continues to hold back growth opportunities. But, a positive turnaround in the figures will provide a welcome relief for the industry as a whole, and offers an injection of cautious optimism.”

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