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Clothing and footwear retailers slash prices as sales suffer

Clothing and footwear prices fell 7.5% year on year in May as retailers pinned their hopes on discounting to clear unsold spring stock.

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This compares to a 7.1% year on year reduction in prices in April, according to the BRC-Nielson Shop Price Index. On a month-on-month basis, prices fell 0.7% between April and May.

Women’s, men’s and kids’ wear “continued to apply significant downward pressure” on the overall clothing and footwear category, the index found, as did footwear and babywear to a lesser extent. This outweighed a rise in clothing accessories prices.

“Retailers have increased levels of discounting over the last three months due to poor sales performance, which we have witnessed in our own Retail Sales Monitor, which has reported flat sales growth in both March and April, driven by the fashion categories,” said the BRC.

Overall non-food prices fell by 2.7% year on year in May, a slower rate than the 2.9% decline recorded in April. Including food, shop prices were down 1.8% in May, up from the 1.7% year on year decline in April.

Helen Dickinson, chief executive of the BRC, said: “The fact that today’s figures remain deflationary doesn’t come as a great surprise. We’ve experienced a record run of falling shop prices and, for the time being, there’s little to suggest that’ll end any time soon – so the good news for consumers continues.

“Indeed, with food prices remaining flat at the same time as wages continue to grow means customers will have yet more money in their pockets at the end of their weekly shop.

“Looking slightly longer term we know that the recent commodity price increases will start to put pressure on retailers to raise their own prices. We would normally expect these input costs to filter through to prices eventually, but the big question is how far fierce competition in the industry will insulate consumers from price increases.

“If retailers do continue to absorb these costs it’ll be more important than ever that other external costs, business rates chief among them, are brought under control.”

Mike Watkins, head of retailer and business insight at Nielsen, added: “Shop price inflation remains below consumer price inflation and falling food prices are still being driven lower by global commodity prices as well as intense competition, which shows no sign of relenting any time soon.

“Non-food prices also continue to fall, and with shoppers indicating that they are becoming more cautious about spending, retailers will have to keep prices the same or probably even lower over the next six months.”

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