UK retailers rely on promotions

26 June 2012

LONDON: Retailers in the UK are relying more heavily on promotions than was the case this time last year, new figures suggest.

PricewaterhouseCoopers (PwC), the advisory group, polled 100 retailers, and found 73% of stores were either holding sales or advertising special offers in their windows last week.

This marked an increase from 70% from similar research published last year, and constituted an expansion on the 40% total posted in 2009.

Moreover, the average discount on the products assessed by PwC stood at 47%, measured against the 45% recorded in both 2011 and 2010.

Among the factors reported to be influencing this strategy was the mixed weather in June, which offset much of the positive impetus derived from the Queen's Diamond Jubilee and sporting events like Euro 2012.

"Retailers have been hit by the poor weather and the subdued economic backdrop," Christine Cross, chief retail and consumer adviser to PwC, told the Financial Times.

The food sector has seen a particularly high incidence of promotional activity, with supermarkets witnessing especially "troublesome" trends as shoppers continue their "love affair with value".

Apparel chains faced many similar difficulties, as category sales are often "weather-related", the analysis added.

While it is hoped by many observers that the forthcoming Olympic Games in London may help stimulate demand, the event also has wider implications for retailers' strategies.

Cross suggested, for example, that, in a lot of cases, summer sales are effectively being artificially truncated as a result of the Games.

On the one hand, retailers are trying to shift old stock, while on the other, many affluent buyers visiting the capital for the Games could well be tempted to buy without the need for discounts.

Many chains, however, are also concerned about the delivery of stock after the Olympics begin, as a consequence of transportation hold-ups, meaning they may wish to withhold inventory for emergencies.

"Retailers making a lot of their living out of London, the department store chains in particular, are keen to look good for the Olympics," said Cross.

Data sourced from Financial Times/Independent; additional content by Warc staff