Big chains already offering reductions of up to 40% to kickstart spending
Widespread promotions across the high street are likely to set the tone for a discounted Christmas, analysts and retailers expect.
High street bellwethers including Debenhams, Marks & Spencer and Bhs, womenswear retailers Top-shop, River Island and Jane Norman, as well as etailer Asos have all been offering sales and promotional tie-ups, discounting slow-selling knitwear lines and outerwear collections by as much as 40%.
This week’s BDO High Street Sales Tracker showed that overall sales at clothing and footwear retailers were down 6.7% for the week ending October 30. This is likely to put further pressure on retailers to look to discounting to kickstart consumer spending ahead of a particularly critical festive trading season.
Retailers are going into the fourth quarter with more stock than they would have done because of the warmer weather, said Maureen Hinton, retail analyst at Verdict Research. Propensity to discount was being pushed by a drop in consumer confidence and the need to give consumers an incentive to buy.
Peel Hunt retail analyst John Stevenson has pointed out that consumers are shopping only when they need to, causing high street retailers to start discounting across categories such as outerwear. He said: “I’m not immediately concerned about stock levels at the moment but the weather really needs to hit or else markdown will come and shoppers will just buy around the promotions.”
Stevenson added that the critical point would be after Christmas trading, conventionally retailers’ rent quarter. He said: “I think banks could be looking to close some poorly performing indies and some privately owned companies.”
Ken Bartle, chief executive of footwear chain Jones Bootmaker, said October trade had started off badly but the half term had helped to boost sales towards the end of the month. “Everyone is spreading doom and gloom which doesn’t help the retail position,” he added. “We are not downbeat. If the weather is half decent it won’t be comfortable but it won’t be a disaster.”
Colin Temple, managing director of footwear chain Schuh, warned against promoting too soon. “If you start a Sale too early you’ll get Sale fatigue,” he said. “People that go on Sale too early could have a tough January.”
Sally Bailey, chief executive of lifestyle retailer White Stuff, said trade was tough with everything selling at a “slightly depressed level”. “I don’t see [customers having more money] in the short or medium term and they’re not going to magic it out of somewhere,” she added. “I don’t think it’s going to be any better than it is now.”
Another industry source said many retailers would be using promotions to drive footfall, highlighting lower-priced items at the front of stores. “I think snow [last year] will play a part in making the figures look better,” the source added. “No one is holding out for a bumper Christmas.”
Vernon Etridge, international sales manager of young fashion brand Yumi, thought shoppers would spend as usual over Christmas but predicted “casualties” next year. “The transitional periods are probably the most key times because we’ve got a long time from February before it starts getting warm, so summer season clothing won’t sell.”
Next chief executive Lord Wolf-son predicted a subdued Christmas but gentler economic headwinds next year as inflation annualises.