Retailers have blamed the vicious cycle of discounting for increasingly tough trading conditions on the high street, after the situation was last week said to have reached “crisis” point.
Last week, Drapers exposed just how worried leading figures are about the rising costs of doing business, such as the living wage, the slowing economy, unseasonable weather, concerns over a possible Brexit and changing consumer behaviour.
Responding to the story, retailers – both from multiples and independents – told Drapers “unsustainable” levels of discounting were to blame.
“Trade is very challenging and you don’t want to get dragged into promotion,” said Daniel Rubin, founder and executive chairman of Dune. “However, the reality is, if stock isn’t selling – if it’s not exciting enough for the consumer – you have to promote it to keep it moving and improve cash flow.”
He added: “Our shopper is looking for a real point of difference. We have to invest in design to come up with interesting product – if it’s something she has seen before, she will wait until it is discounted.”
There was “particularly intense” promotional activity on the high street in March, the British Retail Consortium and KPMG said when they released the latest results from their joint retail sales monitor this week.
Despite the price slashing, last month sales of clothing and footwear suffered their steepest decline since September 2014.
Visa Europe’s UK Consumer Spending Index found the amount spent at clothing and footwear retailers declined 1.8% for the three months to the end of March, compared with the same period the year before. The amount spent on entertainment was up 5.6%, and in restaurants and bars spending was 5.3%.
The chief executive of one womenswear multiple blamed the “unpredictability” of trade: “It is a surreal time to be doing business. It used to be simple but there seems to be no rhyme nor reason to shopping patterns and the level of footfall any more.
”So many retailers are discounting because they have issues with cash flow. Trade is much lumpier now and our ability to predict it has become more difficult.”
One young fashion agent observed that trade over the last few months had been “rubbish”: “It is shocking out there. Independents and smaller retailers are really struggling up against the big boys like Asos, who can go on Sale as and when they want to boost traffic.”
“At last high street chains have realised they have created a customer who is obsessed with discount rather than value,” said the owner of one occasionwear boutique.
“Trying to out-do each other with the lowest prices and constant Sales combined with overstocking and bad buying decisions have eroded the margins of these chains.
”You only need to look at the plight of [department store chain] Beales to see that. Once the previous chief executive took them down that path, the troubles started and a consequent lack of investment has only made it worse.”
He added: “It’s time to start retailing again and concentrate on the core values of a great product, innovation and awesome customer service.”