Chancellor George Osborne has been urged to use his Budget to try to boost shoppers’ spending power after new figures showed a drop in sales on Scotland’s high streets.
Total sales in February were down by 1.4% on the previous year while like-for-like sales – which strip out factors such as new store openings – were 2.3% lower than in February 2014.
The latest Scottish Retail Consortium (SRC) – KPMG retail sales monitor revealed conditions were “highly challenging” for grocery retailers, with total food sales down by 2.6% on 12 months ago.
Meanwhile, non-food sales were down by 0.5%, but when adjusted for online shopping there was a rise of 0.5% – the best performance in the category since November 2014.
Sales of beauty products and jewellery did well in the run-up to Valentine’s Day while clothing and footwear had its best performance since August last year, with stores reporting an initial “good uptake” of their new spring ranges.
David Martin, head of policy and external affairs at the SRC, said that after adjusting for inflation, total sales had increased by an “almost imperceptible 0.2% in February”.
He added: “It was, yet again, another month of two halves.
“Non-food sales drove all of the growth in February and had their best online online-adjusted performance since November.
“Clothing and footwear performed well for those retailers whose new spring ranges coincided with milder weather at the start of the month.
“Valentine’s Day also drove strong sales of beauty products, jewellery and food-related gifts.
“Food sales, however, continued to struggle as any discernible recovery in household incomes, aided by lower interest rates and falling fuel prices, did little to translate into growth at shop tills.”
He said a range of factors were responsible, including households spending spare cash in other ways, such as eating out and leisure activities, while “fierce competition” between the supermarkets impacted on sales values.
“Whilst conditions remain highly challenging for grocery retailers, it is a great time to be a consumer with the cost of groceries declining at an unprecedented rate,” Mr Martin said.
“With the Chancellor unveiling his Budget today, retailers will be looking closely for policies which make it easier and less expensive for retailers to invest, and which boost the spending power of households, particularly for those on lower incomes.”
David McCorquodale, head of retail at KPMG, said food sales had fallen back to “levels not seen since October last year, reflecting a setback on the long, hard road to recovery in this sector”.
He added: “Health and beauty was a winner in February as St Valentine launched Cupid’s arrow and household appliance sales benefited from innovative new product launches.
“Fashion retailers had a mixed month, with discount-led promotions driving sales at the expense of margin.”