Lack of Christmas cheer as UK’s High Street retailers face uncertain future

Father-Christmas-looks-at-0With just two more shopping days to go before Christmas Day, there’s evidence that the UK’s high street retailers are in panic mode over generating sales as nearly 75% are holding sales or promotions in a last-ditch attempt to attract shoppers.

The average discounts rose to 46% compared with 42% last week and 44% in the same week last year, according to the accountancy firm PwC.

Today, Marks & Spencer is planning to extend 30% discounts across all its non-food product lines and has already introduced 30% reductions on its knitwear as well as beauty items, nightwear and Per Una clothing range. In the past, M&S launched pre-Christmas deals before, but this year’s move is a desperate attempt at luring more customers into its stores in the wake of sluggish sales in the run up to Christmas Day and signifies its struggle to turnaround a lack luster performance in its clothing division, a key part of chief executive Marc Bolland’s recovery plan.

helena-greenM&S had high hopes for its bizarre GBP multi-million TV advertising campaign created by agency RKCR/Y&R that put model/actress Rosie Huntington-Whiteley front and centre in a fantasy treatment which references Alice in Wonderland and the Wizard of Oz that also featured Hollywood ‘A List’ actress Helena Bonham Carter. This now looks like an expensive mistake as it has failed to stimulate more footfall or interest from consumers.

Elsewhere on the high street, fashion retailer Gap extended its discounts by an extra 10% to 60% this week in the hope that shoppers will buy clothes rather than technology gadgets in the run up to Christmas. But it’s all looking a bit too late for that.

Other signs of desperation to drive sales include Debenhams that has already launched its half-price sale, Austin Reed has slashed 60% off some of its clothing lines and the Home Counties favourite department store House of Fraser has been forced to slash prices by as much as 50%. Even discounter Argos that typically has a buoyant pre-Christmas sales patch has launched a half-price toy sale ahead of the traditional Boxing Day sales.

Researchers point to mild winter weather and a general squeeze on disposable incomes that’s dampening sales on Britain’s high streets but there’s also a much deeper and underlying problem that needs to be addressed.

The British Retail Consortium (BRC) is continuing to put a more positive spin in the lack of Christmas cheer by pointing out that in the next couple of days UK shoppers are expected to spend GBP 12bn. But the late run into Christmas means that many sales may well be lost.

With quarterly rent day for retailers due on Christmas Eve, many retailers may struggle to make ends meet, leading to some closing shop before the year is out.

These fears for business failure are confirmed by new research that shows for the second consecutive year since 2011 multiple retailers – those running more than six shops – are closing more stores.

Table-retailIn 2012, 20 stores a day closed on average – compared to 14 a day in 2011. Year-on-year, the overall reduction in the number of stores climbed more than tenfold from 174 closures in 2011 to 1,779 in 2012.

The outlook for 2013 could be a lot worse, according to retail analysts Local Data Company that’s predicted more of the UK’s high streets will be turned over to pay-day loans providers, charity shops and pound shops as austerity continues to affect the viability of traders in electronic games, cards and posters as well as general clothing outlets.


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