Discounting grows in UK, fashion retailers do it most

By

Sandra Halliday

Published
Oct 26, 2018

Independent retail discounting levels have increased by 10% over the past year, and fashion stores are applying the biggest discounts to products, new data released by retail software provider Vend has revealed.

Market pressures such as weak consumer spending and a highly competitive environment are forcing independent retailers to use markdowns more frequently than before to lure shoppers into the stores.

Fashion stores appear to be the most prolific discounters, offering bigger discounts and more frequently than other retailers. These stores have an average discount of 18%, compared to an average of 5% for health and beauty stores and 8% for home, lifestyle & gifts stores.

But overall, the percentage off that retailers are applying to their products has not increased. And sales volumes and spending have seen a boost, with sales volumes up 5% year-on-year, and spending up 9%, according to Vend.

“The growing demand for discounting has really been impacting big-box retailers like John Lewis over the past year, so it’s not surprising that independent retailers are also feeling that same pressure,” says Higor Torchia, EMEA Country Manager for Vend.

“But it was clear in our data that discounting is changing. From 2016 to 2017 retailers were discounting very frequently, and prices were fluctuating up and down a lot. Whereas in 2018 discounting levels have generally remained steady, with much bigger spikes happening every now and then. As we know, frequent discounting can be hugely detrimental to retailers, especially indies who often have small margins. It’s likely these retailers are trying to fight back against ‘always-on’ discounting, and instead create more strategic sales campaigns at key times.”

The data revealed that, generally, markdowns are helping driving sales, with a positive correlation between discounting and consumer spending.

“When we looked at the data outside of December, which is always going to see big numbers, there were quite a few instances where peak spending days followed along very closely with peak discounting days - though not always,” Torchia continued.
 
“This is probably due to discounts often working well as a marketing tool, where retailers promote an upcoming sale to their customer base which drives those customers in-store to spend more than they usually would.”
 
The report is based on UK customer transaction data from Vend recorded between September 2016 and October 2018 from a sample size of 600 retailers.