Yahoo Finance Sales start early as Boxing Day forecasts spell trouble
Boxing Day sales began early on the high street as retailers looked to stimulate demand from consumers, which could spell trouble for the high street and beyond.
As consumers get ready for Christmas, “Super Saturday” has seen an increase in shopping activity but not enough to give hope.
In November 2018, the Retail Insight Network predicted £99bn ($125bn) of sales in the fourth quarter, representing an annual growth of 2%. That forecast came before profit warnings from even the most resilient of online retailers, ASOS (ASC.L), and warnings from Mike Ashley of retailers being ‘smashed to bits’ by a difficult November. Super Saturday and predictions for Boxing Day do not appear able to lift the gloom.
Last week, retail experts Springboard predicted footfall for Boxing Day to drop 5.2%. “It is going to be the worst Christmas we’ve had for a good few years, apart from when we were in the depths of recession,” said insight director Diane Wehrle.
Debenhams (DEB.L), Marks and Spencer (MKS.L), Topshop, Next (NXT.L) and Disney (DIS) all brought forward their sales ahead of Boxing Day.
Very, eBay (EBAY), Boots (WBA), Currys PC World (DC.L), and even Amazon (AMZN) are reported to be preparing their own set of huge discounts to attract customers.
Accounting firm Deloitte forecast that the average discount offered by the retail sector would reach 48% by Christmas Eve, as they desperately try to shift excess stock.
The Guardian reported that data from insolvency experts Begbies Traynor (BEG.L) showed that retail problems extend beyond the high street. Of 30,000 retailers facing poor Christmas trading, 8,500 of them operate online. That is a 49.5% increase in companies struggling since the start of 2017.
“Even online, which has been hailed as the future of the sector, is not immune,” said Julie Palmer, partner at Begbies Traynor.
“As we near the end of the crucial festive period, with many retailers pinning their hopes on a final flurry of shopper activity this weekend as more are plunged into significant financial distress, to say 2018 has been a tumultuous year is something of an understatement.”
Springboard reported a year-on-year 1% increase in high street footfall – which was up 6.9% on Saturday but, overall, down 0.7% from the previous year.
Wehrle warned that there are few reasons to be optimistic. Speaking to the BBC, she said: “It was a bit of a last-minute burst, but it’s not good.
“People are buying less and what they’re buying is at a lower price, so this is bad for retailers as they’re left with more stock and they’re selling it at a lower profit.”
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