Retail: Shoppers will pick up discounts as retailers battle high street washout

By SCOTT REID
Published on 19/07/2012 11:04

SHOPPERS are set to benefit from heavy discounting for the rest of the year after Britain’s summer washout brought a sinking feeling to the retail sector today.

Analysts said many big names were likely to keep slashing prices and running sales promotions in a bid to win custom, even if better weather does materialise.

The prediction came as the devastating economic impact of a sodden summer was laid bare when retail giants Halfords, JJB Sports, B&Q-owner Kingfisher and Mothercare all said the exceptional wet weather had hit demand.

The misery was compounded by official data that revealed June retail sales volumes were worse than expected. The 0.1 per cent gain between May and June fell far short of City expectations for 0.6 per cent growth.

The wettest April to June period since records began has exacerbated an already-tough backdrop for retailers in an economy mired in recession and public sector austerity cuts, hitting sales of a wide range of goods.

Daniel Solomon, an economist at the Centre for Economics & Business Research (CEBR), said: “If summer is cancelled altogether this year, retailers will continue an uphill struggle.

“To keep consumers in the shops, retailers can be expected to continue heavy discounting going forward. It is one of their key tools against households’ belt-tightening, high unemployment and the weather.”

Stephen Robertson, director-general at the British Retail Consortium, said: “The wettest June on record posed a major challenge for retailers.

“These figures confirm our own showing that there was only a mild-boost from the

jubilee but it did stop June being significantly worse.

“Retailers with unsold shorts, sandals or garden furniture are now pinning their hopes on a decent late spell of sunshine to clear space for autumn ranges.”

Posting a 7.5 per cent fall in like-for-like high street sales over the 13 weeks to 29 June,

Halfords admitted the “unseasonal weather conditions” had affected sales of bicycles and outdoor leisure products. The group also parted company with its chief executive of four years, David Wild, pushing its shares higher.

Shares in JJB Sports headed in the opposite direction after it reported an 8.7 per cent slump in like-for-like sales in the 24 weeks to 15 July, though stores refurbished under its turnaround programme performed much better.

The group, which issued a profit warning only last week on the back of poor sales of Euro 2012 football shirts, is to seek a fresh round of rescue funds.

Kingfisher, which also owns DIY chains in a number of overseas markets, said its underlying group sales fell 0.4 per cent in the ten weeks to 7 July.

B&Q’s like-for-like sales were 1.1 per cent higher but this was still lower than the City’s initial hopes after a near-12 per cent slump in the previous quarter.

Elsewhere, Mothercare saw like-for-like sales in the UK drop by 6.7 per cent in the 15 weeks to 14 July, although analysts said this was broadly in line with expectations.