Discount and value stores confident as consumers control Christmas spending
Discount and value retailers are more confident of a strong trading performance this quarter than mid-range and high-end stores, new research from Barclays Corporate Banking reveals.
A massive 86% of discounters and 85% of value retailers said they are confident of growth before the end of the year. But, strikingly, mid- and high-end stores really aren’t that far behind in terms of seasonal confidence with high-value retailer confidence scoring 78% and mid-rangers 76%.
Retailers operating at a lower price point have also been buoyed by consumers rushing to get Christmas shopping done early, with 38% of discount stores saying that they had seen festive shopping get under way before the end of September – ahead of high value (25%) and mid-range (21%) businesses.
Meanwhile, 75% of value retailers said they would be offering Black Friday discounts, ahead of the sector average of 71%.
“These trends chime with survey evidence that shoppers will be looking for cut-price deals this Christmas. On average, consumers are looking to reduce spending across all retail categories by between 25% and 30% due to the rising cost-of-living”, the report said.
The data also highlights the important role of a hybrid (physical retail underpinned by click & collect) shopping for lower-priced businesses. Some 92% of the discount retailers surveyed said that a presence on high streets and in retail parks is vital to their success, the highest of any group surveyed, and value stores who offer click-&-collect generate more sales via this method (42%) than any other retailer category.
Karen Johnson, Head of Retail and Wholesale at Barclays Corporate Banking, said: “This year, as rising costs place a squeeze on consumer spending as well as business profitability, it looks as though retailers operating at a lower price point will benefit most. Shoppers will be hungry for deals across the festive period.
“However, it’s not only about price. The leaders of discount and value retail firms are also adapting their business models to ensure they appeal to the British public in the strongest possible way. This includes re-evaluating where their stores are based, investing in ecommerce technology and catering to popular forms of ‘hybrid shopping’.”
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