Shop Prices Drop In December as Varipus Retailers Continue Discounting Through Christmas

Retailers proceeded to lower prices towards the end of last year as the competitive business environment made it harder for companies to pass on inflationary costs.

According to figures released by the British Retail Consortium and Nielsen, shop prices dropped by 0.6 percent last month, moving farther into deflation, having dropped by 0.1 percent in November.

Continuing a trend that was observed for much of 2016, non-food retailers were the primary source of deflation; prices in this particular section of the market dropped by as much as 2.1 percent. However, food prices, were up by 1.8 percent, rising from inflation of 1.5 percent in November.

The head of retailer and business insight at Nielsen, Mike Watkins, said that the figures revealed that retailers were not making a substantial contribution to the overall rate of inflation in the United Kingdom.

“With consumer confidence wavering and unpredictable levels of demand, many non-food retailers have been keeping prices low to stimulate spending, which will undoubtedly have come at a cost to margins,” said Watkins.

“Whilst food prices have edged up a little due to supply chain increases in fresh and seasonal foods, pricing across supermarkets will remain competitive as we start 2018 with consumers still coping with higher household bills.”

The crucial sales period for retailers come during the winter months. However, heavy discounting around Black Friday, and during the period that comes immediately after Christmas, means that the businesses are usually taking a hit on margins in order to entice shoppers.

 

Retailers on the high street also continued to experience stiff competition from online retailers. According to information from BDO, high street sales dropped for the fifth year in a row last month, down by 2.3 percent.

“Consumer confidence is low, and shoppers have exercised extreme caution or shopped strategically online, rather than visiting bricks-and-mortar stores or making impulse purchases,” stated the head of retail and wholesale at BDO, Sophie Michael.

“As such retailers, and in particular fashion retailers, have felt a fall in footfall and consumer spend.”