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Consumer confidence is weak
21
May '10
Like-for-like sales in April were 2.0% lower than in April 2009, when they had risen 4.3%, boosted then by Easter falling in April 2009 but March 2008. The April trading period included only Easter Sunday and Monday this year, but all of Easter in 2009. Total sales in April were 0.7% up on a year ago, when Easter had boosted growth to 8.2%.

Easter distortions and consumer caution meant like-for-like sales performance was the weakest since March 2000 and total sales growth the worst since April 1999.

Non-food sales fell back, hit by consumer caution and pre-election uncertainty. Clothing and footwear, homewares and furniture all suffered, with discretionary items worst affected.

Like-for-like sales fell less than they did in the UK, but they had picked up less in March. UK sales were 2.3% lower than in April 2009, when they had risen 4.6%. Fragile consumer confidence in Scotland, especially about public sector job cuts, made shoppers cautious about spending.

Richard Dodd, Scottish Retail Consortium Head of Media, said:
"This was the worst total sales growth figure since April 1999 but it's nowhere near as bad as it looks. Customers' reluctance to spend in the face of economic and political uncertainty is a factor but the main explanation is the timing of Easter.

This year's earlier Easter meant much of the spending resulting from it fell into March, undermining April's figures. The Easter boost to March's figures was less pronounced in Scotland so the slowdown in growth from March to April was less severe than other parts of the UK.

“Consumer confidence is weak. Customers are worried about jobs, the economy and prospects for their own finances but fundamentally they are happier to spend than this time last year. The Easter effect is only temporary. May's growth is likely to bounce back but emerging news about Government tax plans will influence by how much.”

David McCorquodale, Head of Retail in Scotland, KPMG, said:
“Spending over the Easter weekend is vital to retailers. But in 2010, half the Easter weekend fell in the March trading period and half in April's, whilst in 2009 all of the Easter sales were in April, so the decline in like-for-like sales is exaggerated. That said, looking at the three-month weighted average gives a clearer picture and shows a decline of 0.7% for the three months to April 2010 – the biggest such decline since March 2006.

“Uncertainty and lack of confidence were key to consumer behaviour in the lead up to the General Election and this is likely to persist for a while. Both consumers and retailers are eagerly waiting to hear what tax changes will be announced in the forthcoming Budget. If the rumours of a rise in VAT are true, this is likely to have an impact as the public looks to buy larger items ahead of the application of any increase. Better weather could also have a beneficial effect as summer fashions can finally leave the shelf and be worn with confidence!”


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