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Difficult trading forces new-season discounts and job cuts

A difficult summer season has triggered a reduction in staff across the retail sector, as consumer confidence continues to drop post-Brexit. 

Asos 20% off new season stock

Asos 20% off new season stock

The number of people in full-time employment in retail fell 2.4% year on year in the three months to June 30, as the number of stores fell by 0.4%, according to the British Retail Consortium (BRC).

One department store source told Drapers that retailers are keeping staff numbers “tight” in order to combat a slowdown in the market. They said: “The season has been difficult. Everyone needs some flexibility, so you can flex up if it’s busy, but it has been kept pretty tight over the past few months.

“I think retailers will keep being careful in September and October. They won’t use overtime and won’t replace people as readily. There’s a flood of BHS people looking for work now, too.”

Stephen Selby, managing director of retail recruitment consultancy Success Appointments, agreed that it has been a difficult few months for the sector. “We’ve not seen much coming through in stores over the summer, and the head office support and creative roles have also been difficult,” he said. “The summer was hard generally, partly because of the uncertainty around Brexit and tough trade.

“It has affected the number of jobs available and people’s confidence to move.”

However, he said that things had “settled down a bit” over the past few weeks, adding: “There is more momentum.”

Another headhunter said the outlook was improving: “In the run-up to Brexit, people were holding their breaths and things weren’t moving as there was so much uncertainty around, but it has picked up. It’s still tough out there but the retailers that are doing well will continue to do well regardless.”

In February, the BRC warned the retail sector faced the loss of almost 1 million jobs in the next decade due to rising costs, including the national living wage, apprenticeship levy and business rates.

Further pressure has since arrived in the form of a drop in consumer confidence following the UK’s decision to leave the European Union. Confidence fell by 11 points in the month following Brexit, the sharpest monthly fall since 1990, and now stands at -12 compared with -1 in June, according to market research firm GfK’s monthly index.

Slow trade has spurred some retailers to mark down new-season product. For example, this week Asos was offering a blanket 20% off new season stock, while River Island was offering 20% off autumn coats and boots.

One womenswear supplier for high street multiples said: “It’s a real struggle out there at the moment. If people are selling new season on discount already, what chance has anyone got? Shoppers are still very discount driven but it’s eroding everyone’s margins before the season even starts.” 

Readers' comments (3)

  • To start discounting new stock already is sending out more messages to consumers not to pay full price and where does it end ?

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  • Discounting new season stock only questions validity of RSPs to start with. Fines to follow investigations?

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  • If a retailer is discounting new stock, then the people of the top should be sacked. It's that simple.

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