Retail sales down again despite stronger food performance – KPMG

That figure represents a deeper decline than the 3-month average of -1.6 per cent but in line with the 12-month average of -1.9 per cent.

Last month total Scottish sales decreased by 2.2 per cent year-on-year against the 2.4 per cent decline recorded during the same month in 2015.

Adjusted for deflation measured at 2.0 per cent by the BRC-Nielsen Shop Price Index (SPI), sales decreased by 0.3 per cent in real terms.

On a three-month average basis, total sales increased 0.1 per cent in real terms.

Adjusted for the estimated effect of Online sales, total Non-Food sales decreased by 1.7 per cent versus August 2015, On a 3-month basis, the Online-adjusted Non-Food change turned negative, at -0.7 per cent, against a growth of 0.4 per cent for the UK.

David Lonsdale, Director, Scottish Retail Consortium said: Retail sales performance in Scotland was uninspiring last month, easing down for a second successive month in real terms once adjusted for falling shop prices. Over the past three months as a whole the real terms growth in retail sales has nudged up a meagre 0.1 per cent.

“Grocery items did better, with the category recording its best three-month average performance in over two years. However non-food categories overall wilted further, with clothing and footwear faring poorly despite a fillip from ‘back to school’ purchases. Only health and beauty products such as make-up and fragrances provided positive news in non-food.

“This data should give our politicians pause for thought as they consider government’s tax and spending plans for the year ahead, with retailers looking to the Finance Secretary to do more than just twiddle the fiscal dials in the upcoming Scottish Budget. Ministers should be wary about adding to the pressure on household disposable incomes at a time when consumer confidence remains fragile, by keeping a firm grip on personal tax rates. They also need to look closely at the rising tax burden on Scottish retailers, with reversing last year’s regrettable doubling of the large business rates supplement an obvious place to start.”

David McCorquodale, Head of Retail, KPMG added: “Food sales in Scotland were the star performer in an otherwise disappointing month. Despite the deflationary environment causing further shrinking, the sector saw its best three-month average growth for more than two years. Staycations, coupled with the Rio Olympics, saw families gathering at home to watch Team GB, helping to drive increased volumes.

“Clothing and footwear experienced a sluggish performance despite the weather being fairly average for the month. It is beginning to feel like a combination of changes in consumer psychology, the lure of other leisure activities and experiences, and perhaps a lack of inspiration in the fashion world, are impacting momentum and growth in this sector. With a new season just launched, clothing retailers will be hoping for more than just a promotional lever to pull in order to drive volumes.

“With further price wars breaking out in the grocery sector helping the consumer, the electrical departments will be hoping new launches will absorb the slack in the coming months.”