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Retailers caught in ‘discounting epidemic’ in run-up to ‘tough’ Christmas

High street retailers across the UK are offering deep mid-season discounts for a second year running in anticipation of another difficult Christmas trading season.

In the past week retailers including Asos, Debenhams, House of Fraser, Marks & Spencer, Topshop, Dune London, Phase Eight, Warehouse and Coast have offered discounts of up to 50%. Dorothy Perkins and River Island have up to 30% off.

The autumn Sales come despite a cold snap in September, when temperatures dipped to an unseasonably cool 9ºC in some parts of England and Wales.

The BDO High Street Sales Tracker, meanwhile, indicated that fashion sales on the high street held strong for the first three weeks of September before dipping.

 “This is the most promotional market we’ve ever seen,” said independent retail analyst Richard Hyman. “It’s symptomatic of very weak demand and over-supply. It hasn’t been driven by customers.

 “Things are going to be very tough in the run-up to Christmas. We thought last year was bad but, with the drop in the value of sterling and the challenges of dealing with currency, this year will be worse. Christmas is not great during political and economic uncertainty.”

One supplier to high street multiples agreed: “It’s been a difficult start [to the new season] – people are holding back. Retailers are panicking at the moment because they’re not shifting enough stock, as people are holding onto their money. This is not only because of Brexit, but [possible rises in] mortgage rates, too, and people are just a bit nervous.”

Black Friday on 24 November this year also looms ahead and has pushed a pause button on sales in October, said the CEO of one flash Sale site: “There are lots of issues surrounding Black Friday. It detracts from Christmas trade and also impacts on October sales, as customers wait for offers. But if Amazon does it, retailers have little choice but to run it themselves.”

Other retailers, however, have chosen to avoid discounting mid-season, as the chief executive of one etailer explained: “We have been very disciplined to keep our gross margin stable. Sales are there to shift excess stock, not to drive traffic. You should drive traffic with inspirational products and brands.

“We’re holding firm on prices while so many others have given in to the discounting epidemic.”

Anthony Thompson, CEO of Fat Face, said the retailer will also hold its nerve during “crazy season”: “Everyone will be talking about Black Friday and whether to go on Sale afterwards or before, but retailers need to focus on what customers really want.

“We won’t take part in Black Friday, and we won’t go on Sale until Boxing Day. Knitwear, outerwear, women’s boots – people are buying autumn product already. Fingers crossed that the weather will contain itself and customers will let us know what they believe to be good value.”

One footwear brand’s managing director echoed this: “We don’t have a mid-season Sale on and we probably won’t do a Sale until the end of November. It’s too early for us to discount yet.”

 

What’s your view? Are you discounting more or less than you did last year? Are retailers starting to rein in their Sales? Email us at drapers@emap.com

Readers' comments (4)

  • If you can keep your head when all about you
    Are losing theirs and blaming it on ...........you’ll be a somewhat rare retailer this autumn! (With apologies to Rudyard Kipling)
    Retailers hitting the mid-season sale button can be expected to be followed by a mixture of the application of retrospective discounts to suppliers' invoices and announcement of store closures.
    Stephen Sidkin
    Fashion Law Group
    Fox Williams LLP

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  • darren hoggett

    Discounting is ultimately down to the decision makers at a retailer having a lack of confidence in their own store and their own ability.

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  • Some online retailers were discounting Autumn 17 stock by August bank holiday
    Masdings.com to name one selling Paul Smith etc brand new ranges at 20% off ???

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  • There is hypocritical stance with some 'Account Managers' who - quite rightly - talk about wanting their brand in the right doors that respect the brands image, pricing etc, then at the next breath supply downmarket discounters and shoddy retailers who contradict everything they preach. Square that circle.

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