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Retailers ‘trapped’ by discounting despite sales rise

Analysts have warned retailers are being “trapped” in a cycle of discounting as figures reveal total non-food sales in January were up 2.7% year on year.

The figures from the British Retail Consortium and KPMG show a 1.8% increase on a like-for-like basis, with clothing leading the way in the top three performing categories overall.

Online sales of non-food products climbed 11.7%, accounting for 18.4% of all non-food sales, but this was down against the previous year’s growth, which rocketed up 19.2% on 2013.

Seasonal markdowns drove non-food spending by bargain-hunting British shoppers up ahead of total overall sales, which grew 1.6%, but British Retail Consortium director general, Helen Dickinson, questioned “at what cost to the retailers’ margins.”

Head of retail at KPMG, David McCorquodale, said: “These figures clearly demonstrate the difficult cycle that retailers are trapped in. Demand is now almost solely driven by discounts, with shoppers very reluctant to buy goods at full price in the hope that yet another sale could be just around the corner. 

“This promotion-led environment risks becoming the new normal: retailers are struggling to persuade consumers to break the habit and go back to the traditional sales cycle,” he added.

On the ecommerce results Dickinson said: “As websites continue to improve, including ease of use on mobile devices, with more stock being listed online it is not a surprise that we loved buying online this January. Retailers who have invested in an omni-channel strategy will certainly take comfort in these figures.”

“This side of retailers’ business has a leading role to play in driving overall sales growth, with more shoppers than ever choosing the convenience of buying online,” said McCorquodale.

“In order to significantly move the dial substantial spend is needed to improve the robustness of retailers’ systems and improve the experience for customers.  Retailers’ online operations warrant the lion’s share of their investment budgets this year.”

Within clothing, womenswear delivered the weakest performance, while menswear performed best. Scarves and accessories were cited as doing well, as did sportswear, helped by the growing fitness trend.

@LukeToddUK

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