Changing way we spend our money brings challenges for the high street

Retailers will hope today's Boxing Day sales will offer a last-minute boost to the beleaguered sector '“ hit by disappointing sales in the run up to Christmas.

Wednesday, 26th December 2018, 8:20 am
Updated Wednesday, 26th December 2018, 8:21 am
Leigh Sparks. Picture: John Devlin

Brands including Boots, Argos, John Lewis and Next are set to slash prices further in a bid to win custom amid a flurry of downbeat Christmas trading updates and a slower rate of sales growth year on year.

Despite more upbeat figures last week from the Office for National Statistics which showed a slight rise in sales volumes in November compared to the previous year, growth was still slower than in 2017, when freezing weather conditions had already hit high street sales.

However, today is predicted to be one of Scotland’s biggest spending shopping days with 1.5 million shoppers expected to spend £315 million in shops and £88m online, according to a Centre for Retail Research study for VoucherCodes.

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Retail experts have warned of “discount fatigue” and said that further price cuts will hit companies’s already fragile profit margins. A number of store brands recently warned of poor pre-Christmas sales, with major chains reporting that trading had been below expectations, both on the high street and online.

Leigh Sparks, professor of retail studies at Stirling University, said: “I think we will see a fair number of retailers engaging in Boxing Day sales. But how real they are and how much impact they will have on the businesses, I’m far less sure.

“One thing we’ve learned in the past few years is that Black Friday has distorted the market so entirely the consumers have changed the way they do things.”

He pointed to a recent profit warning from online-only fashion retailer Asos, which said that its 20 per cent discounting had not been sufficient to win sales from its rivals.

He said: “It is a sacrifice of profit and margin for the retailers. Boxing Day sales will be used to give a bit of a boost and get rid of merchandise that is hanging around, however, consumers’s attitudes have changed and while they might pick up the odd thing they want, it is not the same as in the past. There is almost a discount fatigue going on.”

A survey from market research firm Kantar TNS showed that two-thirds of consumers will be hitting the post-Christmas sales this year. Younger people are the most likely to shop the sales and plan to do so predominantly online, while experts expect bigger ticket items such as furniture to be most popular among bargain hunters.

A string of high street chains earlier this month warned that their Christmas sales figures are worse than expected.

Mike Ashley, the founder of Sports Direct, described the start of the Christmas period as “unbelievably bad”, while Primark recently warned investors that November sales had proved “challenging” for the firm.

The increase in popularity of Black Friday discounts in November, which now often last weeks rather than being confined to a single shopping weekend – has hit the traditional Boxing Day price cuts

A report out last week from Deloitte showed record levels of pre-Christmas discounting.

Ewan MacDonald-Russell, head of policy at the Scottish Retail Consortium, said: “Whilst Christmas will always be the focus for retailers, there is no doubting Boxing Day sales continue to be a key part of the shopping calendar.

“It’s also important to note that many consumers will look at very different purchases after Christmas, with furniture and home improvement more important after the Festive frenzy rather than before. Furthermore, Hogmanay will provide another opportunity for food retailers to encourage shoppers to get in the perfect ingredients to end 2018 in style. So even though the Christmas rush is over, there is plenty to keep shoppers coming into store in the last week of the year.”