May marks five month high but in-store sales still shrinking -SRC/KPMG

According to new data from the Scottish Retail Consortium and KPMG, May saw fashion, outdoor living and health and beauty sales all up.

Grocery retailers also enjoyed a better month, according to the latest Scottish Retail Consortium (SRC) - KPMG retail sales monitor.

However, in-store sales declined overall.

Total Scottish sales fell by 0.3 per cent last month compared with a year ago. However, May’s performance was the best since December.

Overall food sales were down 0.7 per cent over the year, while non-food sales held virtually steady with a drop of 0.1 per cent.

But when adjusted for the effect of online sales, total non-food sales were found to have increased by 2.6 per cent - the best performance since August 2014.

Clothing retailers reported increasing demand for dresses, swimwear and summer accessories. Canvas shoes and sandals performed well, as did children’s footwear.

Skincare and slimming products helped to drive growth in the health and beauty category.

David Lonsdale, director, Scottish Retail Consortium, said: “These figures are a welcome improvement on April’s rather poor results, however despite one month’s positive data the retail market in Scotland continues to struggle to show sustained growth. Real terms sales saw a modest rise of 1.5 percent, with Non-Food outstripping grocery. Non-food sales were much improved from last month, driven by improved Clothing and Footwear sales, and slightly raising the three-month average to 0.5 percent. The main driver continues to be online sales, demonstrating the continued importance of digital retailing.

“Grocery sales continue to be weak, posting a real terms fall once food price deflation is accounted for. The three-month average for food sales continues to be negative, highlighting how challenging the food retail market is.

“These figures show the fragile reality of the Scottish retail market. There can be little doubt that Scottish politicians need to look closely both at the retail industry and the wider economy, and carefully consider what policies will best support businesses, encourage consumers, and deliver economic growth.”

David McCorquodale, head of retail, KPMG said: “Rays of sunshine boosted Scottish sales in May, lifting twelve month averages across the board and providing some long-sought relief for retailers. Outdoor Living and Health and Beauty performed well as consumers sought to soak up the rays outside. Fashion also had a better month as the weather provided the impetus to purchase, and promotional activity helped convert the sales.

“The grocery sector enjoyed a better performance with greater volumes, even though price deflation still meant that in value terms, Total Food sales declined.

“Despite the relatively improved performance, Total in-store sales in Scotland still declined, providing evidence that the sector, as a whole, still has its challenges. In particular, the introduction of the National Living Wage has significantly impacted overheads and although sunnier weather brings short-term gains to retailers, in the long-term, productivity improvements and customer focus, coupled with increased consumer confidence, are still needed for survival.”