Bargains as shops fight for survival
Retailers relying on late Christmas shopping surge
Shops are offering deep discounts to lure last minute bargain hunters
A last minute rush to the shops may make the difference between a good Christmas and some stores shutting up for good, according to analysts.
Troubled Toys R Us, which is closing 26 UK outlets, including those in Livingston, Kirkcaldy, Aberdeen and East Kilbride, are just the symptom of wider concerns.
An accounting scandal has raised questions about the future of Steinhoff International, which is the South African parent company of Poundland, Harvey’s and Bensons for Beds.
Many big names, including Debenhams and House of Fraser, have been running promotions since Black Friday at the end of November, with up to 80% off some lines.
Jeremy Shwartz, former chairman and chief executive of the Body Shop, said a typical retailer makes all its profits for the year from its November and December sales.
“These eight weeks will decided just how profitable that company will be.”
He said many retailers had realised that the future lay online, but were not making the transition very successfully.
Sales last week at John Lewis were down 0.6% year-on-year as researchers at Visa and IHS Markit expect total Christmas spending across the UK to fall for the first time since 2012.
Mark Antipof, chief commercial officer at Visa, said: “Consumers were in a sweet spot in 2016 – low inflation and rising wages meant there was a little extra in household budgets to spend on the festive period.”
Business recovery specialists at Begbies Traynor, shows the number of retailers in ‘significant financial distress’ is up 22% on last year to 43,677.
Retail analyst at the firm, Julie Palmer said circumstances have changed since last year. “I fear UK retailers are now in the midst of a perfect storm, with November’s interest rate decision, rising inflation, falling real wages, reduced credit availability and increasing Brexit uncertainty all combining to put unprecedented strain on household budgets this Christmas season, pushing consumer confidence to an all-time low.”
Online spending, however, is still expected to rise – by 3.6% over this Christmas period – meaning that it will account for a record share of this year’s Christmas spend.
Bargain hunters will also avoid the traditional Boxing Day sales crush by spending £900m on the internet on Christmas Day.
Miya Knights, an analyst at Planet Retail, said the internet “is something we don’t switch off from nowadays and as we have the second screen on our laps – our mobiles or our tablets or our laptops – while we sit in front of the TV.”
Despite the online competition, shops will benefit from the last shopping day before Christmas falling on a Saturday.
It is expected to be the busiest shopping day of the year to date, particularly for supermarkets, with footfall up 63%, partly fuelled by those fearing parcels will not arrive in time, or who left it too late to order online.