Fashion weak in November, will stores hold their nerve?
Friday gave us further confirmation that Black Friday didn’t do enough to balance out the weakness in UK stores for most of November with BDO’s monthly sales tracker showing comparable high street sales fell 1.3%. And it means stores need to hold their nerve and hope that a late Christmas rush similar to last year’s actually happens.
Following the worst October for 10 years, November produced even worse news for fashion stores as they fell 2.5%, cancelling out the 0.9% growth seen in lifestyle goods stores, the 2.2% for homewares and the healthy 17.5% online sales increase.
The 1.1% growth in stores during Black Friday Week was also not enough to cancel out the months’ overall decline. BDO said lifestyle goods rose 3.9% during the final week and homewares rose an even better 6.6% while online sales surged 24.7%. It didn’t give a figure for fashion stores but you only have to do the maths in those areas that rose to draw the conclusion that fashion sales dropped.
All those rising sectors count for little if fashion, which makes up a huge chunk of non-food retailing in the UK, can’t generate higher sales.
It had all seemed quite promising at the start of the month as the first week saw 0.4% overall growth boosted by the cold weather that reminded people they needed to buy winter coats, jackets, knits, boots and accessories.
But that enthusiasm soon faded and we can’t help but think that the awareness of discounts just around the corner played a part in that. Given that many autumn/winter essentials tend to cost more (such as coats and boots), consumers were intensely aware that if they held off for long enough, they could get money off.
This was reflected in an increasingly promotional stance taken by stores as the month progressed, Kurt Geiger was a case in point. Its marketing emails promoting its boots offer focused on style at the end of October but had turned to “30% off selected” boots as early as November 11. By November 19, the message was “20% off everything including Ugg”. By the end of the month it was offering up to 40% off boots, despite that category traditionally being one where discounts don't happen until very late in the season.
This reflects the fact that BDO said shoppers kept their purses firmly closed during the middle two weeks of November, with sales down 4.3% and 2.35% year-on-year respectively during the two periods, and the signs now point to a potentially tough Christmas on the high street.
Sophie Michael, Head of Retail and Wholesale at BDO LLP said: “Many stores have struggled so far in the final quarter of this year, and a small rise in sales over Black Friday won’t be nearly enough to deliver a positive like-for-like result in the fourth quarter.
“We believe that the fall in consumer confidence combined with the drop in real earnings due to rising prices is very likely to lead to shoppers cutting back on their discretionary spending while maintaining their spend on festive food and drink.”
It’s a difficult time for retailers to know exactly what to do. BDO said that last year saw a “massive last-minute festive buying spree, [with] double digit like-for-like growth in the week leading up to Christmas.”
But Michael said: “It will be a tough decision for retailers on whether to go early on discounting or hold their nerve and retain their stock at near to full price for that possible final week surge. Furthermore, peak revenue events put a massive strain on retailers to provide logistics and infrastructure to enable maximum fulfilment of orders in time for Christmas.”
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