Strong Christmas sales boost Scottish retail

Figures compiled by the Scottish Retail Consortium and KPMG show total Scottish sales increased in the last month of 2016 by 0.7 per cent compared with December 2015, when they had declined by 0.2 per cent.

This is the strongest rise since January 2014, excluding Easter distortions, higher than the 3-month and the 12-month averages of -0.2 per cent and-1.3 per cent respectively.

Adjusted for deflation measured at 1.4 per cent by the BRC-Nielsen Shop Price Index (SPI), December sales increased by 2.1 per cent.

Total Food sales increased 2.5 per cent on December 2015, when they had increased by 1.1 per cent.

This performance is the highest since October 2013 and pulls the 3-month average to 1.1 per cent, the best since December 2013, and the 12-month average to -0.7 per cent, the best since August 2014.

Total Non-Food sales declined 0.7 per cent compared to December 2015, when they had decreased by 1.2 per cent.

This is higher than the 3-month and 12-month averages of -1.3 per cent and -1.8 per cent respectively, driven by a rebound in Clothing & Footwear.

Adjusted for the estimated effect of Online sales, total Non-Food sales increased by 2.0 per cent versus December 2015, when it had increased by 1.8 per cent.

On a 3-month basis, the Online-adjusted Total Non-Food change was 1.6 per cent, the highest since March 2014 and above the UK average of 1.3 per cent.

Ewan MacDonald-Russell, head of policy and external affairs at the Scottish Retail Consortium, said: “A strong last week before Christmas led to the strongest rise in Scottish sales since January 2014.

Adjusted for deflation, total sales rose by 2.1 percent. It’s encouraging to see another good month’s performance, which builds on a good November, and continues the Autumn trend of a small but now sustained recovery in retail sales.

“Grocery sales were strong, up 2.5 percent on December 2015, the best performance in over three years. Food sales were driven by a late surge in customers stocking up for Christmas, demonstrating the crucial importance of the holiday. Non-Food sales were also positive, although once again online sales were responsible for the sales growth. As expected there were good sales of mid-priced items, with fragrance and mobile phone gifts performing well.

“However, whilst a good Christmas is a real boost to Scottish retailers, there are some worries ahead. A number of economic indicators suggest that inflation is affecting input costs for retailers, and that’s already starting to feed through to the High Street. Those costs also mean that whilst total sales value may rise, that may not correlate with an increase in retail profits. Consequently both customers and retailers are likely to continue to feel the squeeze over the early months of 2017.”

Craig Cavin, head of rtail in Scotland at KPMG, said: “It was a Merry Christmas for retailers in Scotland, and strong sales over this vital period will give the sector some confidence moving into 2017. Compared with figures from the previous year, December 2016 marks a significant increase in spending, for both online and High Street sales.

“Christmas feasts were the order of the month, with total food sales up 2.5 per cent in December. With price increases likely over the coming year, consumers were happy to make the most of the festive discounts.

“The timing of Christmas also gave shoppers an extra day to grab last-minute gifts which, coupled with relatively calm weather in the weeks prior, all point towards favourable conditions for retailers. Online sales of home accessories, beauty products and toys played an important role in driving the 2 per cent boost in non-food sales.

“Strong Christmas sales will give retailers much-needed hope as they prepare for the coming months, when they will have to face up to the possibility of rising food prices and the ongoing uncertainty around Brexit.”