Will the 'sale' be enough to save the retailer? - Rupert Eastell

The run-up to Christmas has seen a raft of promotions with just about every retailer ‘on sale’. Most have been forced to bring forward their traditional January sales into December, offering ever deeper discounts each week. December has become the new January.

However, despite these actions the signs are not encouraging. Like-for-like sales are still down significantly. Our L4L survey across medium sized retailers indicates sales have dropped by 8.4 per cent during the three week period up to 14 December. Although mid market retailers don’t want to follow the herd into mass discounting – with many not having the critical mass to make this work – just sitting back and watching shoppers go next door because another store is on sale is just not an option at Christmas.

The longer term implications of the December sales bonanza could also be very serious. Shoppers will still be expecting extensive discounting after Christmas. How will retailers now be able to return to a full price model in the new year?

Unfortunately, there are no easy answers for retailers at the moment. Ultimately, retailers won’t be able to discount forever. The best retailers will be those that maintain strong brands and adopt a flexible approach to changing customer habits rather than just discounting.

There is mounting evidence to suggest that what consumers really want at the moment is not huge discounts on goods they probably did not want in the first place, but good value pricing on goods they do want. In this respect the likes of Asda and Primark really seem to have struck a chord with shoppers, while strong brands such as TM Lewin, River Island and Next are also well placed.

If you’d like more information about how BDO's retail team can help you, please speak to your local BDO Partner or Rupert Eastell, Head of Retail.