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ARE SHOPS DISCOUNTING TOO EARLY?

Aruba, December 24, 2015 - The big Christmas giveaway: Are shops discounting too early?

There are just a few days to go until Christmas Day and the festive shopping spree is in full swing. Many analysts are predicting the best ever sales for retailers this season. 
In contrast, some are warning the fact that so many shops have started their sales - well ahead of the traditional Boxing Day sell-off - bodes ill for the sector's performance.
 
Could 2015 turn out to be the worst ever festive season for retailers? We ask the experts.
 
The pessimist
Richard Hyman, veteran retail industry expert:
The discounting this year is unprecedented. I've never seen anything like this and I've been working in the industry for 35 years. 
 
Retailers across every sector of the industry have spent the last year teaching customers to only buy on sale. UK retail now has too many companies, with too many stores and too many websites, chasing too few customers. 
An excess of supply over demand is forcing the majority of the industry to resort to price cutting in order to put money in the tills. And the message to shoppers is clear - if you see something you like, wait for the next promotion when it will be cheaper.
 
Right now, 70% of companies are running a price promotion. Clearly, the majority of retailers feel that they cannot entice shoppers to spend without offering the price drug as an incentive.
When most of the market is discounting, it tells you that they are doing it by default not by design. It suggests spending is so weak that sales are not coming through in the way retailers need and they have to turn stock into cash.
 
What we're seeing now is a structural change in retail indicating a growing excess of supply over demand.
Pre-Christmas sales have become the new normal. The problem is the new normal of having your margins cut and brand integrity damaged is neither healthy nor sustainable.
 
Next year we will see the beginnings of a serious shake out. It will take several years for an effective reset of supply and demand to get to a more viable status quo. 
 
 

By orbitalnets.com