Christmas discounting wars unlikely this year
RETAILERS will not offer big pre-Christmas discounts this year as they attempt to avoid entering damaging sales wars with one another, according to trade credit insurer Atradius.
Owen Bassett, retail risk underwriter at Atradius, said: “Eroding profit margin is unsustainable, so we are more likely to see retailers holding out for as long as possible rather than entering into ‘sale wars’ with one another.”
Last year, retailers were forced to discount early as the double-dip took hold, consumer spending plummeted and they were left with large amounts of unsold stock.
Bassett said: “For every £1 reduction, £1 was eroded from their profit margins. We saw a raft of resulting insolvencies in late 2011 and early 2012 with major retail brands such as Game, Peacocks, Blacks, La Senza, Past Times and Barratts falling by the wayside.”
This year Bassett predicts that retailers will be more cautious so as to avoid the mistakes made last year.
He said: “The retail landscape has changed dramatically in the past 18 months and sales strategy along with it.
The retail landscape has changed dramatically in the past 18 months and sales strategy along with it
“Consumers are unlikely to experience such prolific Christmas discounting as they have enjoyed in recent years.”