Retailers benefit from avoiding price discounting

Fashion sales dipped slightly year-on-year, but non-fashion rose by 8.5 per cent. Picture: Getty
Fashion sales dipped slightly year-on-year, but non-fashion rose by 8.5 per cent. Picture: Getty
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A REFUSAL by many retailers to resort to price-discounting kept high street sales in positive ­territory last month despite ­unhelpful weather, according to the latest figures.

The monthly High Street Sales Tracker from accountancy firm BDO, published today, shows that fashion sales suffered less than expected from the cold spring, while other items had enjoyed solid growth.

Don Williams, national head of retail and wholesale at BDO, said fashion stores had learnt from previous years and were not panicking in the face of poor weather and consumers who were still reluctant to spend.

Instead, retailers stuck to their guns and discounted less, and later, than in previous years.

Williams said: “We’re seeing less over-commitment to stock levels, which allows retailers to hold out a bit longer for better weather and full price sales.

“If shoppers really do call stores’ bluff and refuse to buy at full price, retailers are working hard to build enough flexibility in their strategy to switch tactics and discount.

“Clearly their [profit] margins will take a hit, but many retailers have been working to protect margins through strong focus on costs and increasing efficiency in the supply chain.”

Williams said that by factoring in lower sales forecasts, and not over-committing to initial stock purchases, retailers were striving to avoid the cash flow difficulties that led to “blood on the high street” in previous years.

BDO said like-for-like high street sales were 0.8 per cent higher in May, compared with the same month last year.

Fashion item sales dipped 1.4 per cent year-on-year, but the non-fashion category rose a robust 8.5 per cent, with homewares up 4.6 per cent.

BDO’s figures, which analyse spending at non-grocery retailers with annual sales of between £5 million and £500m, showed online sales continued their meteoric rise – up 26.5 per cent.

Analysts say the squeeze on consumer spending since the financial crisis, as well as declining job security and a cautious view of economic prospects, have made life hard for retailers.

It has led to the collapse of many brands, including music group HMV, JJB Sports, Blacks Leisure, Blockbuster UK, the Comet electricals group, lingerie chain La Senza and photographic equipment shop Jessops. A report last week predicted one in four stores in Scotland will disappear by 2018.

But BDO’s latest report is not the only sign that the high street is fighting back this year. Warmer weather drew shoppers back to Scottish stores in April and helped retailers open more outlets, pushing the vacancy rate further below the UK average.

A recent survey by the Scottish Retail Consortium showed that, in terms of footfall, retailers had their strongest performance last April since December 2011, with 3.4 per cent more visitors year-on-year.

BDO also said that department stores were enjoying a notable change in customers’ buying patterns, with a trend towards shoppers preferring to find a range of goods in one place.