Summer sun drives highest 3-month retail growth in 5 years

The latest SRC-KPMG Scottish Retail Sales Monitor reported a performance was below the three-month average of 1.4 per cent.

It also revealed that in July total sales in Scotland increased by 1.1 per cent compared with July 2017, when they had increased by 0.7 per cent.

This is above the twelve-month average of 0.6 per cent and brings the three-month average to 2.2 per cent, the highest since October 2013.

Adjusted for deflation measured at 0.3 per cent by the BRC-Nielsen Shop Price Index (SPI), July sales increased by 1.4 per cent.

The hot summer weather was credited with total Food sales in July that increased 5.6 per cent versus July 2017, when they had increased by 4.2 per cent.

This is the highest growth since July 2013 excluding Easter distortions, and above both the 3-month average of 4.9 per cent and the 12-month average of 4.3 per cent. The 3-month and 12-month averages are above the UK’s levels of 4.5 per cent and 3.8 per cent respectively.

Total Non-Food sales decreased 2.4 per cent in July compared to July 2017, when they had decreased by 2.0 per cent. This is below the 3-month average increase of 0.1 per cent, the highest since March 2014, and in line with the 12-month average of -2.4 per cent.

Adjusted for the estimated effect of Online sales, Total Non-Food sales decreased by 0.5 per cent in July versus July 2017, when they had decreased by 0.4 per cent. On a three-month basis, the Online-adjusted Total Non-Food sales increased by 2.0 per cent, the highest since March 2014, ahead of the UK increase of 1.2 per cent.

David Lonsdale, director of the Scottish Retail Consortium, said: “Sales in July slipped back slightly from the previous month’s stellar performance, but still saw a credible real terms rise of 1.4 per cent. Shoppers continued to enjoy the super summer weather; with gin, ice, and electric fans all selling well.

“Food sales were particularly strong, with the highest July figures for five years. Consumers continued to buy food for picnics and barbeques, along with summer drinks. On a three-month basis, Food sales were also stronger in Scotland than in the UK overall.

“Non-food sales were less impressive, falling back in line with the longer-term trend. That’s a little disappointing after a strong summer. Whilst it’s a little early to worry, this could be a warning light on the dashboard.

“With the European Championships in Glasgow and the Edinburgh Festival there are reasons to be optimistic for August’s sales. However, with interest rates rising, and household incomes continuing to be under strain, policy makers should continue to exercise caution when considering any further burdens on consumers.”

Paul Martin, UK head of retail at KPMG, said: “The summer shopping spree seems to have come to an end in July, with Scottish retail sales growing by only 0.1 per cent on a like-for-like basis. With demand for a new summer wardrobe satisfied in June, shoppers chose to cool-off away from the high street’s clothes retailers.

“Predictably, food and drink fuelled the majority of sales growth in July, with refreshing beverages and BBQ food the items of choice. Growth was also seen in electricals and electronics, with fans and air-conditioning units flying off the shelves.

“July’s performance provides a reminder that retailers need more than warm weather and well-timed sporting events to succeed. That being said, Scotland has a busy month ahead with Glasgow hosting the European Championships and with Edinburgh the Fringe Festival, and retailers will be hoping this leads to a much-needed sales boost.”