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Why are there so many pre-Christmas sales?

Sale sign Image copyright Getty Images

Shoppers are seeing a boom in pre-Christmas sales as retailers try to lure them back to High Street shops.

Squeezed by rising costs and online competition retailers are turning to sales and promotions to tempt back shoppers.

Greg Harwood, director at analysts Sumon-Kucher said: “We’ve seen a spiral of promotions year after year.

“And it gets more and more intense towards the end of the financial year and they have to produce a profit.”

Research group Springboard estimates that footfall, the number of shoppers passing through shop doors, will fall 4.2% over the crucial December period.

But Springboard marketing and insights director Diane Wehrle warned: “Shoppers are getting immune to discounts.”

“They aren’t content with 10% off. They want 20% or 30% and that’s dangerous for retailers.”

Warnings

There have been warnings of a slump in sales from leading brands including Primark, Ted Baker and John Lewis.

Costs have been pushed up by the rise in the Living Wage, the apprenticeship levy, rising rents and logistical costs, like warehousing and shipping.

Richard Perks, retail analyst at the research group Mintel said: “There have been some retailers starting sales at the beginning of December – that is a real sign of distress.”

Image copyright Getty Images

Mr Harwood said: “Retailers are saying let’s promote more and more to get people back to the High Street. It may even mean they are making a loss on some items but they are then hoping to use traditional in-store merchandising to get people to spend more once they are in the shops.”

Online

Much of the blame for the problems on the High Street has been laid at the door of the online retailers. Around 18% of all retail sales are now online, with 9% from pure online stores.

The BDO High Street Sales Tracker which follows retail sales month by month says that in-store sales in November were down 2.6% on last year while online sales were 18.2% higher on the same month a year ago – that’s the best figure this year.

But many believe online hasn’t just taken away sales from High Street stores, it has drastically changed the whole shopping process.

Ms Wehrle said: “What online has done is reduce the number of physical shops that people go into on one trip. In the past they might have visited eight or nine shops. Now they browse online and then go to three shops. So the retailers has to sell them more and at a higher value.

“To do that you have to have effective and enthusiastic sales people, yet with costs being cut the sales teams are being cut too, making them less effective.”

Image copyright Getty Images

Data bonanza

But Richard Lim, the chief executive of Retail Economics says the huge amounts of data collected online has made some retailers far more sophisticated in their discounting. The sale signs you see in the shops are often on very specific lines rather than discounts across the whole store.

He said: “In Black Friday in 2015 there was a knee-jerk reaction from retailers cutting prices on everything because their competition was doing it.

“Now retailers are taking a far more strategic approach aligning themselves with their suppliers to discount or promote specific lines, especially online.”

“A company like Shop Direct has around a million home pages and is tailored to reflect what you, as an individual customer, [have] bought in the past and your browsing history, your age and possibly the area you live, so it can target you with specific discounts and promotions tailored for you.

“The holy grail of every retailer now is to bridge the gap between online and the physical store, so that the moment you walk into a store customer service can greet you with a tablet and know exactly what you’ve been browsing through the night before online and direct you to what you are looking for. We’re not there yet, but that is where retailing is going.”

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Written by sammypearls

I'm cool, crazy and geeky. I love to explore new innovations and philosophies. I am passionate about nature, morality, beauty, adventure and making new discoveries. Above all, i'm a strong believer in freedom.

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