Debenhams deputy chief executive Michael Sharp believes the retail sector is “staring into the face of the worst Christmas we have ever had.”
Sharp told delegates at the Drapers Fashion Summit 2008 in London this week that there was likely to be a deluge of promotional activity in the run-up to Christmas. Debenhams launched a three-day 20%-off promotion on Wednesday.
He added that retailers needed to be “clever” in terms of timing what product to markdown and when.
Sharp said: “Retailers will have ordered less stock for Christmas in anticipation of the slowdown but my feeling is they are not destocked enough. We will see raised levels of promotional activity and we are staring into the face of the worst Christmas we have ever had.”
Marks & Spencer executive chairman Sir Stuart Rose told the audience that M&S would have to fight for limited shopper spend this Christmas. This week the retailer launched its first pre-Christmas promotion for four years.
Rose said there would be a “limited pot of gold” for retailers in the run-up to the festive season and that M&S had to show that it was “one of the players”.
He said: “We have to face the fact that there has been a step down in trading over the past two or three weeks across the high street. People are very circumspect and there is no retailer that hasn’t felt a softening. It’s not just about controlling inventory.”
He added: “The promotion wasn’t about stock control, it’s about showing that you are one of the pack and trying to get your fair share of the pot of gold, which is small, and we can’t say that we won’t participate.”
Sharp agreed there would be widespread discounting. He said: “We will see [Sale] activity in the week before Christmas and by the weekend before Christmas we will probably see a lot [of retailers] will have gone [on Sale] by then,” Sharp warned.