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Retailers diagnosed with a strong case of discounting fever

A good health check on any country’s fashion market is to look at who is discounting and how deeply.

And so it was that Drapers this week commissioned a piece of research looking at what’s going on in our own fashion retail sector. The research was prompted by a lot of anecdotal reports that this summer’s terrible weather had led many retailers to go for some pretty serious discounting to try and shift stock pre-Olympics.

And it seems from the results we’ve got back that those reports were right. Overall in June and July this year, we saw a greater quantity of discounting than at the same time last year, and bear in mind that 2011 had in turn seen a higher level than in 2010. But before we go all doom and gloom over this, there is one caveat I need to highlight here. Fashion retailers are not stupid, and having seen how unreliable the weather has been over the past few years, they have likely adapted their buying accordingly, so are able to discount more widely within their strategy without getting themselves into too much financial difficulty.

That said, our report still makes sobering reading.

On womenswear in particular there has been a 5.8% rise in the percentage of floor space on average allocated to Sale items during June and July this year compared with last year – with almost a third of fashion retail space in womenswear devoted to discounted product this summer. Interestingly, this contrasts with a stronger performance in menswear, where the floor space has dropped a significant 8.9% this year to less than 30% of the total being on Sale. Also interesting is the level of discount offered this year compared with last – something that backs up the idea of shrewder buying strategies being in place.

The average level of discounting in June actually dropped from 34.6% last year to 32%, a sign that the panic flash Sale may have been alleviated this year, although the levels rose in July to 40.2% on average, almost hitting the 41% reached in 2011.

The key issue with all this is the effect it has on consumer behaviour. With that level of discount on offer and consumers thriftier than ever, the discount culture is sure to lead to demand for almost constant discounting.

I know of a number of my friends who make it their mission not to buy anything at full price, and of course once one retailer enters into discounting there is a domino effect across the board.

Very few retailers have successfully differentiated themselves enough to stand firm on price, so buyers, especially in the womenswear arena, will either have to ‘go Debenhams’ and buy with discounting in mind, or, like Sir Philip Green with his Dorothy Perkins/Kardashians link-up, find that vital point of difference to make price comparison more difficult and drive footfall.     

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