Insight: pre-Christmas discounts rise to new record
New research has shown that for the sixth consecutive year, consumers are enjoying bigger pre-Christmas discounts than they did in the previous year.
Analysis from Deloitte of more than 300,000 products currently for sale in the UK reveals that the Black Friday period, changeable weather and favourable economic conditions for consumers have led to discounts currently averaging 43.3%. This is 1.5% deeper than at the same time last year.
The firm is predicting that seasonal volatility of sales will result in record pre-Christmas discounts rising to 54% by Christmas Eve.
Jason Gordon, consumer business partner at Deloitte, said: “This is the sixth year in a row that we have seen ever increasing discounts. Such a long precedent has led to consumers becoming conditioned to expect substantial discounts in the run up to Christmas. This long-term trend, combined with the current consumer-friendly economic conditions of low inflation, high employment and high disposable income, will provide retailers with the perfect opportunity to offer deep discounts in order to shift unwanted stock.
“The changeability of the UK weather is another reason for the record levels of discounting; the lack of a prolonged cold snap means that we are likely to see heavy discounting of winter fashion items. In addition, consumer spending has, in recent months, been shifting away from goods and services and towards leisure activities, such as eating out and entertainment, which has further deepened retail discounts.”
“The fact that we have seen such deep discounts so early is an indication of the level of nervousness from the high street. Economic uncertainty in 2017, particularly around how increasing inflation will affect consumer confidence and spending, has encouraged retailers to err on the side of caution. Deep discounts, calculated using increasingly sophisticated analytical tools, will help retailers shift stock and remain competitive before the uncertainties that lie ahead.”
Deloitte’s analysis has found that there is already a wide spread discounts ranging from 5.4% to 85.4% and currently averaging at 43.3%.
The company said weekends remain key for retailers when it comes to the timing of promotions, with Christmas Eve, falling on Saturday, likely to be pivotal, particularly for in-store sales.
Gordon added: “Last-minute shoppers on Christmas Eve could benefit not only from being able to make use of Saturday’s full day of trading, but also from the deepest cuts that we have seen for some time. Boxing Day, on the following Monday, will kick off a full week of deeper-than normal discounts until the start of the New Year.”
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