Scottish Retails Curb Sales Drought With Discounting

Scottish retail sales increased in May, bucking the overall UK trend, but many retailers drove customer spending through discounts. May saw Scottish sales increase by 1.8 per cent on a like-for-like basis. This is a slight increase on last month, but is still below the growth rates seen earlier in the year. The overall increase was 5.5 per cent.

Retailers in the food sector reported total sales growth of 6.8 per cent, with like-for-like growth of 2.2 per cent. The Scottish Retail Consortium reported a trend towards consolidation in the food sector, with larger companies expanding sales.

Non-food sales increased by 1.4 per cent on a like-for-like basis and 4.2 per cent overall. Acute price declines in the clothing sector, as the deflation factor is compounded by discounting, is making the impact of the overall softening of spending even more marked, and pushing down like-for-like sales in that market. Nevertheless, the SRC said the figures show some underlying resilience in Scotland, contrasting with the overall UK figures where total sales growth is much lower.

Fiona Moriarty, director of the Scottish Retail Consortium, said: "Scotland's retailers have continued to erode their margins by using promotions and discounts in order to get customers through their doors in May. In some cases this has meant that volume of sales were higher than in the same period last year, but this has not translated directly into higher values for retailers.

"The weather was extremely unpredictable in May, with the one fine weekend giving some retailers a temporary boost, but generally, most are finding trading conditions tough at the moment."

Andrew McLaughlin, group chief economist at the Royal Bank of Scotland, said: "Scottish retail sales, while slowing, remain more resilient than in other parts of the UK. The housing market may hold the key to understanding this puzzle. The 'boom' in retail sales in recent years was led by a surge in spending on household goods, related to a strong housing market."