The Mother of All Sales

It looks like the early sales I predicted in my post of 11th Nov Is the Base Rate Drop enough to save Christmas Sales is starting to happen already. Debenhams started a 3 day sale today, Marks & Spencer are having a 20% off day tomorrow and Philip Green’s The Arcadia Group are, according to analysts, about to start their sale this week.

With still 5 weeks until Christmas this is a sign of desperation not seen for many years. It also begs the question as to whether the sales will be kept going for several weeks or will (clothing and footwear) retailers bring in their Spring stock early – perhaps a bit of both?

What you should now be doing? Well, as the saying goes, ‘if you can’t beat them, join them’ so it will be a brave retailer who tries to go it alone. Prepare to get out the red marker pens as the ‘big boys’ marketing clout should bring those who still have money to spend out into the shopping centres and if you are not creating on offer in your window they are not going to come in. You may not need to slash the prices off everything. A targeted and well thought out mark-down strategy could strike a balance between cash flow and profitability with the hope that customers, once through the door, will still buy full price merchandise.

Here’s food for thought. I read an article yesterday advocating that instead of discounting, if retailers increased their prices by 10% they could take a 20% drop in sales and still make the same gross profit. Well the maths may be correct (obviously depending on your margin etc) but unless you have no competition the reality may be very different. Still it’s something you may want to consider on specific lines where you may have an retail advantage.

Late News – Woolworths are in talks to sell all of their stores. It is believed that Hilco the ‘turnaround specialists’ are looking to buy 815 stores for the grand sum of £1 – considering Woolies rejected an offer from Iceland of £50 million in August – this looks like the Mother of all Christmas Sales’!!!

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Rescue and Recovery Consultant

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