Scottish retail sales dropped 3.9% on a like-for-like basis in March, making it the worst drop since January 2000.
Total retail sales fell 0.3% – the first fall in total sales recorded since the survey began in 1999.
The Scottish Retail Consortium (SRC) said the timing of Easter hit trade. In March last year total sales rose 3%, when sales were boosted by Good Friday and Easter Sunday falling into March.
The SRC-KPMG Sales Monitor found that food sales dropped 1.7% last month while non-food sales showed a “much steeper” fall of 5.9% as consumers’ underlying uncertainty about jobs and incomes, as well as the later Easter, took its toll.
The survey found that sales were often deal-driven, while big ticket purchases of homewares and furniture purchases were hardest hit.
SRC director Fiona Moriarty said the timing of Easter is a “contributory factor” to the sharp decline in sales last month, but added: “The drop can’t be accounted for by that alone.”
She said: “Reality is biting for Scottish shoppers. People are increasingly nervous about the economy and their personal finances and are reluctant to spend unless they have to.
“Consumers in Scotland don’t have the confidence to spend on large items for the home or buy into new fashion lines. Where they are spending, the focus is on bargains and price cuts.
The current spell of warm weather and the approach of Easter offer some hope but it will take more than sunny bank holiday weekends to fundamentally change the gloomy retail outlook.”
KPMG head of retail in Scotland David McCorquodale said: ” We have seen an emergence of new, lower spending patterns since the middle of January as consumers re-adjust their family budgets to take into account the combination of mounting fuel and utility costs, falling house prices, higher VAT and real inflation.
“Many retailers will not be able to sustain this ongoing weakness in demand beyond the short term and are hoping for some good news around the extended bank holiday period and a feel-good factor driven by the Royal Wedding.
However, as disposable income continues to fall, without reducing saving or increasing borrowing – which would oppose current trends – this will not be possible.”