The crucial summer selling season is finally upon us, but for retailers on London’s most celebrated high street, all is not well.
Big red discounts in shop windows line the parade on Oxford Street, where many of the country’s flagship fashion stores are offering major price reductions in a desperate bid to boost their sales.
Seemingly gone are the days when these iconic brands could rely on an influx of shoppers looking to renew their summer wardrobe, as they turn to price cuts of up to 60 per cent to claw back customers. Once great department store chains like House of Fraser, Debenhams and John Lewis are all flooded with clearance sales.
Even Sir Philip Green’s Topshop store on Oxford Circus – the troubled tycoon’s jewel in the crown – now offers half-price sales to lure in shoppers. According to Shore Capital’s Greg Lawless, who first noted the discounting trend in a market update earlier this week, there are just four notable retailers still trading at full price on Oxford Street.
Lawless argues there are several prevailing reasons for the current troubles: poor weather, the shift away from spending on products towards spending on services, the increasing demand for sustainable products and longer product life cycles, and the structural shift online.
Add to this the cost of soaring business rates and tough comparatives from the hottest summer on record last year, and it is not hard to see why Oxford Street has already turned into a discounting frenzy.
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It is a sorry sight to see that even one of Europe’s most prestigious shopping streets is now having to slash its prices, threatening not only profit margins but also a retailer’s credibility among consumers.
Continuous discounts also mean customers are often tempted to put off their purchases, because they know that if they wait then prices could drop even lower.
As the high street kicks off the summer season with an unusually aggressive spate of discounts, investors in the City should take notice – these big red discounts are really big red warning signs.