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Pre-Christmas discounts cut deeper than last year
Early findings from Ernst & Young's annual Christmas pricing survey show that discounting on the high street in the run up to Christmas is deeper and more widespread than last year - underlining the ongoing downturn in consumer confidence.
Overall, pre-Christmas discount levels have so far averaged at 36% off the full-selling price, versus 35% for the whole of the pre-Christmas period in 2006 and 33% in 2005.Jason Gordon, Senior Manager for Retail at Ernst & Young explains: “Consumers have lost the feelgood fa
He adds: "Like last year, we're seeing a huge range of promotional techniques on show as retailers strive to differentiate their offer. The discounting landscape is complex - it can be confusing for the customer. It's also debatable whether retailers are actually able to measure the impact of each 'sale' or promotion, and more importantly, protect margins at the same time as driving sales growth.”
Looking ahead to the remainder of December trading and into January, Gordon comments: “Although footfall figures were poor in the latter part of November and early part of December, shopper numbers have started to pick up in the second half of the month. It's all set for a real frenzy of activity in the last weekend before Christmas. And it's inevitable that discounting will become even more intense, as retailers attempt to boost sales and clear poor selling items.”
"Against this backdrop of heavy discounting and deteriorating consumer confidence, we are expecting trading for the whole of the Christmas period to be muted, but not the disaster that some commentators are predicting. Gavin George, Head of Retail at Ernst & Young concludes: “Strong growth from online and solid performances from grocery will prop up overall retail sector performance. We're forecasting very low like-for-like growth across the retail sector as a whole, with big variations in performance between the winners and losers. The early part of next year is set to be even tougher for retail, as cautious consumers rein in their spending even further. Consequently, we are likely to see an increase in retailer profit warnings and even further casualties on the high street.”
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