With 11 days to go until Christmas, retail discounts currently average at 43% and are set to rise to 54% by Christmas Eve, a record high.
According to Deloitte, which analysed more than 300,000 products currently on sale, this represents the sixth year in a row that British consumers have been treated to a growth in pre-Christmas discounts. And it says the 43% average is 1.5 percentage points deeper than the same period last year.
It says a number of factors have contributed to deeper discounting, including changeable weather conditions, the biggest ever Black Friday and a more embedded culture of discount retail.
“This long-term trend, combined with the current consumer-friendly economic conditions of low inflation, high employment and high disposable income, will provide retailers with the perfect opportunity to offer deep discounts in order to shift unwanted stock,” speculates Jason Gordon, a consumer business partner at Deloitte.
He says that a lack of a prolonged cold snap has resulted in heavy discounting of winter fashion items. Consumer spending has also shifted towards eating out in the fourth quarter, which has in turn forced many retailer’s hands.
The biggest level of discount Deloitte recorded was at a staggering 85.4%, with weekends remaining the ‘key time’ for retailers to time promotions.
Former Asda’ marketing boss Barry Williams recently told Marketing Week dealing with inflation will be the “biggest factor” in deciding if retailers sink or swim in 2017. Gordon, who agrees, believes the current level of discounting also shows a sense of fear.
He concludes: “The fact that we have seen such deep discounts so early is an indication of the level of nervousness from the high street. Economic uncertainty in 2017, particularly around how increasing inflation will affect consumer confidence and spending, has encouraged retailers to err on the side of caution.
“Deep discounts, calculated using increasingly sophisticated analytical tools, will help retailers shift stock and remain competitive before the uncertainties that lie ahead.”
Even if discounts are currently high, consumers are still being cautious around making big purchases. According to GfK’s Consumer Confidence index, British consumer’s propensity to make a big purchase fell by nine points to a score of just five in November.