UK high street retailers slash prices in approach to Christmas

Discounting has stepped up across the UK high street amid mounting concern over trading in the crucial run-up to Christmas.

As retailers approach the critical weekend before the holiday, discounts and promotions are in evidence across the high street, while Debenhams has demanded a discount from suppliers just eight days before Christmas.

"There has definitely been an increase in discounting intensity over the last few days," said Jason Gordon, consumer business partner at Deloitte.

This had been driven mainly by promotional activity, while some retailers, such as footwear chains, had gone into full sale, he said.

According to PwC, the professional services firm, 64 per cent of 100 high street retailers were advertising promotions in their shop windows last week, a slight reduction on 69 per cent in 2012. However, the level of discounts being advertised was higher, at 42 per cent this year, compared with 36 per cent in 2012.

The discounting reflects sluggish trading across the high street over the past few weeks, particularly in fashion.

"Its very, very ugly," said one senior retailer.

Two other clothing retailers said that trade was slow across the market.

Christine Cross, the independent retail adviser, said sales of homewares were strong, helped by the improvement in the housing market, as were those of electricals, boosted by demand for tablet computers.

However, retailers and analysts fear this may be diverting money from other areas of the market, such as fashion.

Even John Lewis, which has been a winner for the past few Christmases and which tends to outperform the broader high street, has reported unspectacular trading over the past few weeks.

But analysts said there were other factors at play.

Richard Hyman, the independent retail consultant, said retailers may have bought more stock in the hope of better economic news.

"There was such a wave of consistent upbeat news from everybody about the economy, there was a danger that retailers thought 'we have managed our stocks really tightly, there is going to be a bit of an uplift, we have got to have enough stock to take advantage of it'," he said.

"After several years of having been so anxious about loading up on too much stock . . . they may have been seduced into buying a little bit more."

Furthermore, the problems may have been exacerbated by a warm autumn, compared with cooler temperatures last year.

Mr Gordon said the pattern of trade would also be affected by a long run into the holiday this year.

"With Christmas being on a Wednesday, most people are not working on Monday and Tuesday. They have four solid shopping days in the run up. We think people are expecting more discounts to temp them to transact," he said.

It is not just non-food retailers that are under pressure.

According to figures from Kantar Worldpanel, the consumer research group, more than half of consumers shopped in Aldi or Lidl in the 12 weeks to December 8.

The rise of the discounters is hitting the so-called big four supermarkets, with Tesco's sales falling by 0.1 per cent in the four weeks to December 8 and Wm Morrison's sales falling by 0.7 per cent. Sales at Asda and J Sainsbury also grew below the overall market rate.

For non-food retailers, Mr Gordon said that while the level of discounting ahead of Christmas had intensified, it was nowhere near the panic price cuts seen as the economy turned down in 2008. He also forecast that savings would not be as steep in the post-Christmas sales.

"The high street is definitely trying to wean the UK consumer off only ever buying things on discount, which is exactly the right thing to do," he said. "But what is happening is [retailers] are trying to pull more demand to this side of Christmas, so there is less emphasis on the Boxing Day sale."

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