Christmas sales to be big but discounting will affect margins

By Patrick Avenell

Retailers offering big discounts to get consumers into stores to clear stock used to be reserved for after Christmas, hence the Boxing Day Sales. That is quickly changing, however, with one-third of retailers saying they will be starting their Christmas sales in early December, according to a report by analyst Deloitte.

Although these sales are likely to impact gross margins, retailers are optimistic that total sales will be stronger this year compared to Christmas 2011.

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“Discounting is expected to begin early, with 32 per cent of respondents expecting to begin discounting in early December,” said a spokesperson. “The timing of discounting reinforces the experience of the past few years, whereby full priced sales as a proportion of total sales have progressively decreased.”

“The decision of when to discount continues to be a key factor in the planning of businesses for the Christmas period. Too early and potential full priced sales are lost. Too late and competitors will take market share.”

According to the Deloitte report, more than two-thirds of retailers were expecting improved trading conditions in the lead-up to Christmas.

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