In the years before the recession hit, the peak trading period before Christmas was a chance for fashion retailers to increase profit margins and shift huge amounts of stock in preparation for the arrival of new lines during the key Spring/Summer season.
However, some of the UK’s largest fashion brands have been forced to alter their Christmas trading techniques due to a downswing in consumer confidence and a consequent decrease in spending excessively throughout the festive period.
Instead, fashion retailers now tend to attempt to rope consumers in with pre-Christmas sales, rather than following tradition and introducing promotions on Boxing Day. Despite a small improvement in household disposable income since the end of the recession, it seems that this is a trend which has continued into this year.
New Look and French Connection, both brands which struggled during the economic downswing, launched sales last week with consumers able to save up to 50 per cent on certain items. This decision may well pay off in the long run, but is seen by New Look chief executive Anders Kristiansen as something of a ceding to peer pressure.
He said; “I was determined that we would hold our nerve and wait until after Christmas but you cannot be the only retailer not on promotion – it compromises your footfall.
“We have therefore launched promotions in a number of categories, in line with everyone else.”
Yet high levels of competition within the fashion sector appear to be only the tip of the iceberg when it comes to the reasoning behind early discounting initiatives. With both the PlayStation 4 and Xbox One launched onto the market within the past month, fashion retailers are increasingly finding that consumers tend to select gifts from the electronics sector – especially considering the affordable range of tablet computers now on the market, primarily Tesco’s own brand model.
Unfortunately, it seems to appear that fashion retailers are furthering the problem of profit squeezes by caving in to pressure to discount earlier and earlier in the run up to Christmas. Data released by accountancy firm PwC shows that average discounts being advertised last week equalled 42 per cent, compared to a slightly lower 36 per cent during the same period last year.
PwC head of retail consulting, David Oliver, believes that reversing the trend of pre-Christmas discounts may now be difficult given the retail trends of recent years.
He says; “We are not seeing panic but I do think the market has changed and that consumers have been trained to expect discounts before Christmas so there is certainly a cohort who wait for that to happen.”
His sentiments were echoed by veteran retail boss Stuart Rose, chairman of Fat Face and Ocado, who said; “There is a game of chicken going on.
“Consumers are waiting for the market to make an offer and then they will decide to go shopping.”
Do you think there is any way for fashion retailers to reverse the trend for pre-Christmas discounting or are early sales now a deep-set trend in the British retail industry?
Previous Post
Deloitte identifies Barriers to Future Growth in London
