Christmas may be kind to UK retailers this year

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: Sarah Shannon

A year after swaths of panic price cuts led to a Christmas ‘Armageddon’ for UK retailers, Britons may find it harder to get a bargain before the holiday.

Marks & Spencer Group, New Look Group and House of Fraser are among stores that say they don’t plan full-scale discounting before December 25. With consumer optimism holding at an 18-month high, shoppers may still spend more in December than a year ago, according to researcher Mintel International. “I can’t see last year’s level of disorder on the high street,” New Look finance director Alistair Miller said. Going on sale before the holiday “is an absolutely suicidal move for retailers”.

According to analysis conducted by PwC, only 43% of town-centre retailers offered discounts or ran promotions last week, compared with 62% a year ago. Ninety of Britain’s 100 biggest store-owners started discounting before Christmas last year as the financial crisis that followed the collapse of Lehman Brothers Holdings caused consumers to slash their holiday budgets.

“There’s much less blanket discounts this year,” said Richard Dickinson, chief executive officer of the New West End Company, the organisation which represents retailers in central London’s main shopping district. Only 40% of central London retailers are planning pre-holiday discount days this year. Numis Securities analyst Andy Wade expects Christmas to be ‘a lot stronger’ for profitability as discounting subsides. Marks & Spencer’s gross margin narrowed by 1.7 percentage points in its last fiscal year after the retailer held two ‘Christmas Spectaculars’, one-day events in which the price of almost all products was cut by 20%. Those won’t be repeated this year, according to executive chairman Stuart Rose, who said this month that the ‘Armageddon’ scenario of 2008 has now passed.

M&S, the UK’s largest clothing retailer, will “trade full price through Christmas,” Rose said. Instead of price cuts, the London-based company will rely on 1,000 new products such as a $75.2 Christmas dinner for four people. House of Fraser, the UK’s third-largest department-store chain, will only run ‘targeted promotions’ such as 25 pounds off party-wear in the run up to Christmas. Last year, the retailer offered price cuts of as much as 50% before the holiday. New Look, the owner of 610 budget fashion outlets, will run promotions on party dresses later in the holiday season and start discounting by as much as 70% from December 26.