Scots shoppers cut back on all but essentials

SCOTTISH shoppers are cutting back on spending on everything other than essential items, the Scottish Retail Consortium (SRC) warns today, reporting the largest drop in non-food sales in eight years.

Like-for-like sales in October were just 0.1 per cent higher than last year north of the Border, with higher food prices accounting for the modest growth.

Publicising its monthly retail sales monitor, the SRC said last month's minimal growth was little better than September, which was the worst for more than three years.

However, Scotland performed better than the UK as a whole, where like-for-like sales slipped 2.2 per cent in October according to last week's figures from the British Retail Consortium.

Home-related products such as furniture, flooring and homewares were worst affected as a smaller number of shoppers opted to invest in high-price goods such as sofas or beds – and even fewer were moving house, necessitating the purchase of new furniture.

The gloomy figures were backed up by John Lewis's latest weekly sales report, which emerged this week, revealing that the firm's department store sales across the UK plunged 14 per cent in the seven days to 15 November, compared with the same period the previous year.

Dr Howard Archer, chief UK economist for Global Insight, said John Lewis's results – normally published at the end of each week – were a "bellwether for the health of consumer spending" and reinforced fears of a "prolonged, deep recession".

According to Archer, John Lewis, which has three stores north of the Border – in Edinburgh, Glasgow and Aberdeen – has pointed to exceptionally strong figures in the previous year to explain the decline.

The SRC figures are a further sign that the retail sector in Scotland is suffering badly as the effects of the economic slowdown begin to bite.

Yesterday one prominent Edinburgh furniture retailer told The Scotsman that he had noted a definite shift in customers' spending patterns on big-ticket furniture items.

Scott MacKay, commercial director at family-owned furniture store Richard F MacKay, said he was expecting 2008 turnover to remain largely flat.

MacKay, whose grandfather, Richard, founded the store almost 80 years ago, said: "It is very noticeable that the middle of our market is not as successful right now.

"People who would maybe be paying £400 to £500 for a sofa – there are a lot fewer of them around. I think they are maybe the people who were bouncing from credit card to credit card and are not doing that any more."

But he added that his downturn in mid-market sales – which he estimated as being 10 per cent lower than the same time last year – are being compensated for by a 20 per cent rise in high-end purchases.

He continued: "People who have cash in liquid form seem to be buying more quality items – such as sofas at around the £4,000 mark. I think people who have that cash, perhaps people with good pensions who have paid off their mortgages, see this as a good opportunity to buy high-quality items at a discount."

Fiona Moriarty, director of the SRC, said: "As Christmas nears, these are worrying figures. The biggest decline in non-food sales since June 2000 and minimal sales growth overall show how nervous customers are reining in on all but essentials."

Although food sales grew by 4.4 per cent, non-food items slumped by 3.8 per cent. Clothing, especially mid-market brands, performed badly, what sales there were driven mainly from discounted items.

The SRC said that low-cost accessories such as bags or jewellery were faring well as people opted to add "small extras" to give a lift to existing items of clothing rather than buying whole new outfits. It added that consumers were opting to spend their money on children's shoes as a more essential item, while adult ranges were performing more poorly.