“Smarter” retailers protecting margins
A combination of retailers focused on protecting their margins and consumers holding out for bargains has resulted in a steady but somewhat unspectacular December sales period.
Figures released today from BDO’s December High Street Sales Tracker show overall like-for-like sales up 1.9% year-on-year.
While not the bumper end to the year some were hoping for, retailers will be breathing a sigh of relief after recovering from floundering sales in the week before Christmas (ending 16 December) which dipped 3.7% year-on-year.
Chains that have learned from the mistakes of last year are likely to report better margins thanks to tighter stock planning and better planned discounting. Although experiencing relatively modest year-on-year sales rise, many retailers will still count December as a success.
Non-fashion was the strongest sector, with growth of 7.1% thanks to increased sales of Christmas ‘gifting’ items from well-established brands and department stores, and luxury items once discounting started.
With sales flat year-on-year, fashion fared less well, hit by December storms and strong figures from this time last year.
But retailers were buoyed by a 30.9% year-on-year growth in non-store sales with shoppers becoming ever more comfortable with online purchasing – especially from big name brands - as well as making use of growing Wi-Fi and 4G coverage to pick up bargains while on the move.
“Last year we saw several stores having to slash prices to levels that really hit their profits after getting caught with too much stock,” explained Williams. “This year there has been a clear focus on protecting margins. By building up to Christmas early in a planned and measured way there has been less knee-jerk discounting. At the same time consumers are continuing to feel the pinch of hard economic conditions and are being much more careful about when and where they spend their money.”
Williams also urged fashion retailers to invest in their non-store sales channels.
“Mobile shopping channels are also becoming more sophisticated and clothes shoppers are now more comfortable with trading an in store experience for a fast, convenient and hassle-free online shopping experience. When backed by a strong brand and outstanding customer service this is becoming an increasingly important addition to retailers revenue figures and we expect this trend to continue, especially with the arrival of 4G,” he said.
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The BDO High Street Sales Tracker analyses like-for-like spending at non-grocery retailers with annual sales of between £5m and £500m
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