Today’s retail sales figures for March for Scotland (the Scottish Retail Sales Monitor published by the Scottish Retail Consortium) show the worst total sales performance ever measured since the series began in 1999; so much for overdoing the doom and gloom.
There is a collapse in non-food sales, and food sales are down. Like for like sales overall are 3.9% lower then a year ago and Total sales are down 0.3% against last year. As the graph shows, the three month moving average for total sales is at its lowest ever level for Scotland and close to its worst ever for the UK (the economic collapse of late 2008).
The graph also shows that Scotland continues to underperform the UK as a whole, a pattern that has been in place now since late 2009. Prior to that, Scottish retailers benefitted from almost 6 years of out performance.
Is Scotland hitting the bottom or still in freefall?
A single month’s figures can be misleading, albeit these confirm the trend of the last 18 months and the warnings of many over the collapse of consumer confidence and spending. But one month is subject to the vagaries of the weather, especially in Scotland in March, and the timing of Easter and other holidays between the years has an impact – in this case Easter last year was in the March figures but not this year. Are these a one-off with short-term confidence to be restored through a wedding and some sun?
But the figures also hide the inevitable spread of performance. Some retailers will be outperforming others, and there is evidence of stronger sales in discount and promotion driven retailing. Conversely of course that means there are losers. We also have little clue as to whether the winners and losers are located either out-of-town or in-town. Are we seeing a shift amongst locations? There is limited evidence of some increase in footfall in some Scottish towns and cities, but nothing really to pin a big in-town recovery on. And then we don’t know in detail how the internet is doing against “real” shops. Internet sales seem to be continuing to grow, which given today’s figures would suggest fixed shop sales are suffering more. This structural change will continue to ripple through our towns and other retail locations.
So, Holyrood has a problem. though not perhaps totally of their making. Can we see the news getting better? Confidence remains in very short supply for consumers, with falling incomes, new tax and other cost rises and growing fear of the future. Next month’s figures may be better, for timing and other short-lived reasons, but there is little reason to be optimistic in the medium term. A few more months and years of overall stagnation or decline seems the most likely outcome on the current course.
For retailers, this is the new reality. Some will adapt to it better, but for others the decline makes their position unsustainable. Retailers will have to fight for their share of sales and this may mean the trend to discount and promotion continues awhile. There is every chance it means that Scottish towns and out-of-town retailing will see more gaps appearing – for some this will be an opportunity to move in, but will there be enough to fill the space? How we manage this transition is not yet at all clear. Adding costs to this situation unthinkingly will simply exacerbate retail’s problems.
And then we have the internet. The structural change of internet and mobile shopping continues to reverberate through our retail operators and locations. The rise of “click and collect” systems hold some promise for re-use of space but does require new ways of managing and using space. As yet we do not know how this will play out fully. What perhaps Scotland’s towns and retailers don’t need is government subsidies to major internet players to re-locate within Scotland, when the future of targeted support for existing towns is so uncertain.
So, some retailers may be stabilising and adapting to the new reality. For others further free fall awaits; such hard landings are never pretty. Today’s figures should be a big warning sign.