Cost of living: Discount chains most confident retailers as cash-strapped consumers count pennies

Discount and value retailers are more confident of a strong trading performance in the crucial countdown to Christmas than mid-range and high-end stores, new research suggests.

The study by Barclays Corporate Banking comes as the high street faces a tough period amid soaring inflation, leading to many consumers cutting back and switching to cheaper brands. When asked if they are confident of growth before the end of the year, 86 per cent of discount retailers said that they are, followed by 85 per cent of “value brands”, with high value (78 per cent) and mid-range (76 per cent) merchants further behind, according to the research.

Retailers operating at a lower price point have also been buoyed by consumers rushing to get festive shopping done early, with 38 per cent of discount stores saying that they had seen such shopping get under way before the end of September - ahead of high value (25 per cent) and mid-range (21 per cent) businesses. Meanwhile, 75 per cent of value retailers said they would be offering Black Friday discounts, ahead of the sector average of 71 per cent.

Karen Johnson, head of retail and wholesale at Barclays Corporate Banking, said: “The last three months of the calendar year are traditionally referred to as the ‘golden quarter’ in retail because of their importance to the industry’s annual sales. This year, as rising costs place a squeeze on consumer spending as well as business profitability, it looks as though retailers operating at a lower price point will benefit most. Shoppers will be hungry for deals across the festive period. However, it’s not only about price. The leaders of discount and value retail firms are also adapting their business models.”

Jerome Saint-Marc, chief executive of retail chain Wilko, added: “Festive trading, which for us begins with Halloween, started even earlier this year. We’re seeing customers plan ahead and budget for occasions and our sales have been encouraging. We’re ahead of forecast by 28 per cent for Halloween and more than 30 per cent for Christmas, and we’re confident that we’ll deliver not only the essentials but also the little treats to help make the magic go further.”