The retail industry seems set on a path of recovery, with nationwide results indicating an improvement in consumer confidence and a leap in footfall in high street shops up and down the country. However, with Easter falling in March rather than April this year, there has been much confusion regarding distortion in the market.
Certainly, at first glance, the Scottish Retail Consortium (SRC) -KPMG Retail Sales Monitor for April 2013 seems to show negative results – total sales decreased by 2.1 per cent while like for like sales were down by 3.0 per cent. However, when compared to last April, when total sales dropped by 4.1 per cent and like for like sales decreased by 5.2 per cent, this year’s results show a slowing of the downturn.
With shop price inflation standing at 0.4 per cent, total sales for April were down by 2.5 per cent when considered in real terms.
Yet SRC Director Fiona Moriarty points out that these results are actually a sign of the retail environment taking slow steps towards recovery.
She says; “If you strip out the Easter distortions, April sales growth was actually a slight improvement on March, and the overall three month average is still marginally up on the same period in 2012.
“The figures don’t yet reflect it, but we’re seeing very tentative signs that the mood is starting to lift, especially consumer confidence which has crept above the UK average for the first time since September.
“Retailers will be hoping that the Bank Holidays and warmer weather in May will return a better set of results and boost this fairly subdued three month average into more positive territory.”
Total food sales suffered something of a knock, with a drop of 1.4 per cent comparing unfavourably to an April 2012 fall of 0.7 per cent. Again, though, this can be put down to the timing of Easter.
Non-food sales performed much better, recording a drop of only 2.7 per cent compared to last year’s 7.3 per cent plunge. Electrical and homeware sales managed to pull up a struggling fashion sector, on which the poor weather took its toll on the Spring/Summer released lines.
Head of retail at KPMG, David McCorquodale, believes that retailers will place additional pressure on their businesses in order to keep up the first quarter’s signifiers of growth. However, he believes that the weather will play a significant role in determining the success or otherwise of the Scottish retail industry.
He says; “Looking ahead, sales at the till will remain hard fought for, with promotional activity squeezing margins, as retailers’ anxiety grows around ensuring the first quarter’s stronger performance continues.
“Now that we’re into May, retailers will also be looking skyward in the hope the wetter weather stops and sales prospects of summer fashions and gardening products improve.”
Do you think a positive turn in the weather will play a vital role in the fortunes of the Scottish retail platform, or will other factors such as consumer confidence and fluctuating inflation rates overshadow this aspect?
