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Surprise as Scottish retail sales rocket

© The Herald
Originally published: 18.06.2008
by a staff writer


Scottish retail sales surged again last month, according to a survey whose findings could raise eyebrows among economists but which was vigorously defended by its publishers.

The latest edition of the Scottish Retail Sales monitor shows that total spending increased by 8per cent annually in May, as good weather encouraged consumers to buy summer foods and clothes.

The latest growth partly reflects the unquanitified effect of increases in commodity prices. These have resulted in a spike in inflation, which has alarmed policymakers.

However, the survey findings indicate that they have not been enough to prompt Scotland's shoppers to curb the free-spending ways which have provided a vital spur for the economy.

For the 14th month running spending increased much faster than in the UK, where total spending rose by 4.6per cent.

In the three months to May total sales grew by 6.7per cent on average in Scotland and 2.1per cent in the UK.

As a series of gloomy surveys has suggested recently that UK retailers are struggling with the effects of a sharp decline in consumer confidence, some may treat the latest Scottish monitor with caution.

Last month, Bank of England minutes showed monetary policymakers felt official figures on sales volumes that painted a relatively optimistic view of consumer demand, in conflict with survey data, should be treated with caution.

However, Fiona Moriarty, director of the Scottish Retail Consortium, was adamant that the Scottish monitor was robust.

"In terms of the survey and who we survey I would not put my name to anything that was not credible, " she told The Herald.

"We collect data (from retailers) that hovers around 60per cent of the total value of sales every month; if you're challenging me on whether it's truly representative I would absolutely say it's the most credible sample, you're not going to get bigger."

Moriarty said the same methodology had been used for nine years to produce the monitor, which was compiled and "heavily audited" by specialists at the University of Edinburgh.

As the data for Scotland had been markedly stronger than the rest of the UK for months, SRC had commissioned additional research to back up the figures.

This showed that confidence in Scotland was markedly different from the rest of the UK.

In Scotland, sentiment has been underpinned by a strong labour market. While the housing market is also bearing up better than south of the border, a lower proportion of Scottish residents own their own homes. This means increases in the interest rates charged by mortgage providers have not impacted as strongly.

"Scotland is still regarded as an important growth area for retailers, both new and existing, especially the supermarkets, " said Moriarty.

The SRC noted that sales growth had been stimulated by the development of major new schemes such as the Silverburn centre in Glasgow.

Stripping out the effect of new store openings, like-forlike-sales increased by 2.4per cent in May, the fastest rate recorded since February.

Like-for-like sales increased by 1.9per cent in the UK.

Sales of summer fruit, and seasonal clothes and shoes benefited from the fact this May was much brighter than the same month last year.

However, despite continued aggressive discounting and promotions, sales of floor coverings and furniture were down.

Larger and discretionary homeware purchases were particularly hard hit. SRC said brighter spots included computer games and hardware, notably Grand Theft Auto IV and Wii Fit.

The sales monitor figures are not adjusted to strip out the effect of price changes.

While some stores may include online sales in the figures they submit, not all do so.

 
 

 
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