Britain’s struggling retailers are trying to tempt shoppers back to the high street by offering some of the largest pre-Christmas discounts ever seen, according to RSM Tenon, the UK’s 7th largest accountancy and professional services firm.
Currently, 8,994 retail companies – 13 per cent of the industry – are at high risk of insolvency. As a result, January sales have started early as firms try to lure consumers with the promise of rock-bottom prices. In some cases, major high street retailers are discounting up by up 80 per cent.
Tom MacLennan, RSM Tenon’s head of lender services, said: “The retail industry is having a bleak midwinter. Companies are going into administration, sales are down, and consumers don’t have much money in their pockets. To stay afloat, the high street’s first concern is not profit, it’s cashflow, so they are cutting prices earlier and more steeply than at any December I can recall.
“Retailers will continue to face an uphill battle next year. They will have to continue offering shoppers a massive incentive to spend their cash otherwise they risk collapse as economic problems continue. The problem is worse when you consider that a relatively high proportion of this years’ Christmas presents will be bought with credit cards, possibly contributing to a spending slump early next year as people pay the cards back.”