It is a festive season like no other – particularly for beleaguered retailers. In a normal trading year, stores would have concentrated on selling as much full-price stock as possible in their peak pre-Christmas trade.
Yet months of stop-start restrictions have taken their toll, leading many British retailers to slash prices earlier than in previous years, even before Christmas Day. Some are also offering deeper discounts, rising to as much as 70% off, in an effort to lure shoppers online or into those branches that remained open.
There have been higher levels of promotional activity than usual this year, peaking around Black Friday, according to data from PricewaterhouseCoopers.
PwC tracked the daily promotional activity of 206 online retailers and found that 90% offered some kind of sale around Black Friday, before reining in discounts from the start of December.
Overall, retailers have offered shoppers more targeted discounts than in previous years, to encourage them to spend, according to PwC, as opposed to blanket discounts that are valid for all products.
“Retailers are learning to use their approach to promotions more effectively, and this year it’s important that they hold on to as much margin as possible,” said Lisa Hooker, the consumer markets lead at PwC.
Lockdowns and the temporary closure of non-essential stores in all home nations of the UK may be responsible for some discounting, according to Richard Lim, the chief executive of the consultancy Retail Economics.
“Lots of retailers had all of their stock and inventory in a number of stores which were closed, they missed out on these precious, vital weeks running up to Christmas,” Lim said. “At such short notice, many of them couldn’t suddenly start shipping out online orders from stores. A lot of retailers were heading into the December period with a lot more stock than they would usually have at this time of year.”
The pandemic has created winners and losers within the retail industry, and led to diverging approaches to pre-Christmas discounting. Furniture retailers have struggled to keep up with demand for homeware, allowing them to be more sparing with their reductions.
The UK market leader, DFS Furniture, which trades from stores branded DFS, Sofa Workshop, Dwell and Sofology, told investors in mid-December that soaring sales had led to longer lead times for its made-to-order sofas.
It has been a different story for fashion retailers, however, who have faced a toxic cocktail of challenges during 2020 – the widespread cancellation of events and special occasions, the months-long closure of stores, and the continued closure of changing rooms.
With nowhere to go, shoppers never bothered to get dressed up. They spurned suits and stilettos in favour of slippers and sweatpants. As a result, clothing stores have been the clear outlier in the run-up to Christmas, offering promotions on all items to try to clear their stock.
Some of the biggest reductions are available at shops that are in administration – including the collapsed department store Debenhams and the Arcadia brands such as Topshop – as the firms’ administrators look to swiftly raise cash.
The Debenhams website promises shoppers reductions of up to 70% on women’s clothing in its “closing down sale”, while discounts of 60% are highlighted at Topshop and Dorothy Perkins.
Such swingeing discounting creates problems for competitors who might have hoped to hold off reductions until after Christmas.
John Lewis, which still has its “never knowingly unsold” promise to match prices at its direct competitors, has been obliged to follow some of Debenhams’s discounts.
House of Fraser, owned by Mike Ashley, tried to tempt shoppers with 20% off all full-price items to encourage a final spend before Christmas Day, while the fast fashion retailer Zara launched its Christmas sale earlier than retail analysts anticipated.
This Christmas may turn out to be a “last gasp” for large-scale retail purchases, according to Catherine Shuttleworth, the chief executive of the retail marketing agency Savvy.
“This year is the year of things,” she said. “If everything has returned to normal next year thanks to a vaccine, next Christmas will be more about experiences and spending time with people.”
Retail analysts also caution that consumers should not necessarily expect this most unusual year to set a trend for future pre-Christmas reductions. With difficult trading conditions set to continue along with a squeeze on consumer spending, some of the retailers desperately slashing prices may not be around to see next Christmas.