Here is a short thread about why some UK retailers seem to have been on sale constantly since the summer.

As an odd piece of background: A lot of the high street is 'lead' by fashion. Ie: Even shops like HMV are partially dependent on people going to the high street to shop for clothes, and then popping in to HMV (rather than just ordering what they want direct online).

The main underlying reasons for 24/7 sale are discounting for 3 reasons:



A. Spur extra orders above 'natural demand'.

B. Stop customers leaving for competitors.

C. Clear stock.



Those factors exist a lot of the time. This year, the following happened:

1. Brexit, and more specifically 'political uncertainty': This is ongoing, and seems to have suited politicians but not shops. It means lower spending among certain customer groups waiting to see what happens next, and of course particularly affects 'non essentials'.

2. Holidays: Currency means a summer holiday costs 15% more than 2 years ago (presuming booking ahead). If your customers work to a fixed budget, that means a good amount of that budget has moved to the 'holiday' pot.

(NB: the flipside of that is some positives from tourists. Speak to a taxi driver in London & they'll tell you there is still a good amount of tourists around, taking advantage of the weak pound)

3. Cheaper brands & shift to 'own brands'.



As just one *online* example: ASOS blamed some of their misfortune this year on politics, which became a bit of a joke albeit partially true...

but actually ASOS has pushed more & more toward own brands. A customer buying a Ralph Lauren coat from ASOS would unlikely shift that spend to Boohoo, Missguided, Prettylittlething, isawitfirst (etc), but they're fine buying a Missguided dress instead of an ASOS dress.

Of course both own brands and cheaper brands = either lower spend for the same items, or lower margin, each of which squeeze profits unless you're selling much more.

4. 'The high street is dead' chatter. This is continual, and is basically the reverse of hype: Creating the perception that nobody is buying means retailers are more likely to discount, and consumers are in the mindset they're doing something odd by actually going shopping.

5. Less obvious, and maybe biggest: The summer ran very, very late. A long summer = nobody wants to buy summerwear in September, even if the weather is like July...

And a long summer means nobody wants to buy coats when it's 20 degrees in October, even though the weather *should* be getting colder. So lots of people don't even turn up on the high street.

Late summer means massive excess stock of coats, jackets, knitwear, etc. Some retailers then discount that, which means less profit per item than they had expected. Other retailers then discount in turn, for fear of losing customers to competitors.

When the cold weather eventually hits, retailers who avoided discounting earlier make back *some* of those sales from winter wear, but many of their customers already bought elsewhere at discount. This leaves them a stock problem, which again means discounting to fix that.

And: because numbers were low, each month afterward is a chase to 'make up' lost sales. Halloween becomes a discount event, Mid season sales start when it feels like the 'season' is just beginning weather wise, which turns into Black Friday...

... which turns into a pre-Christmas Sale, which means Boxing Day is then not such a big deal, which then continues into January.



Hence, it feels like much of the high street has been constantly on sale since the summer.

You can follow @danbarker.

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