UK retail experienced falling prices in November as retailers competed for customers, according to the latest figures from the British Retail Consortium (BRC)-Nielsen shop price index.
In November, prices fell by 1.8% compared with the same month in 2019. Of those offering discounts, fashion and DIY retailers are the most likely to lower their prices. Non-food products fell in price by 3.7%, more than October’s 2.7% decline.
Nielsen head of retailer and business insight Mike Watkins said: “Shop price inflation remains low in food with supermarkets competing for the wallet of the Christmas shopper when sales of seasonal food and drink increased at the end of November.
“However, for non-food retailers, the industry faced the challenges of further lockdowns and predicting the levels of demand for online, so it’s not a surprise to see price deflation accelerate, considering the uncertainty around consumer sentiment.”
British Retail Consortium urges government to act
British Retail Consortium chief executive Helen Dickinson OBE said: “As we approach Christmas, consumers will be glad to see another month of falling prices. This was mainly driven by non-food products, where prices have fallen at a much quicker rate than the previous month. Where demand was weak for some products, discounting has followed, with many retailers trying to encourage more consumer spending, particularly those selling fashion and DIY goods. Meanwhile, food inflation remains low, but we anticipate upward pressures on food prices once the UK-EU transition period ends.
“2020 has been an extremely challenging year with two pro-longed periods of forced closures for parts of the industry. Those shuttered during lockdown have lost billions in sales and many are now in a precarious financial position. The government must not subject these businesses to a return to full business rates liability from April 2021, and they must urgently consider extending the moratorium on debt enforcement beyond January. Without such interventions, we will see countless more store closures and job losses, deepening the crisis on our high streets.”
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Black Friday and Amazon Prime Day contribute to falling prices
Global affiliate marketing network Awin retail expert and client partnerships director Rosalyn Berrisford told Retail Insight Network: “There are a number of different factors at play here as to why the price of goods fell in November, and not all are to do with the pandemic. Over the years, the Black Friday discount event has extended its reach from a single day to the whole month, with retailers offering reduced prices throughout November to cut through the noise and attract consumers to purchase from them and not their competitors.
“With customers forced online because of lockdown, brands had to stand out even more so than usual. This has been amplified this year – not only because of excess stock and the additional need to turn a profit during lockdown, but also because of events such as Amazon Prime Day – usually held in summer – taking place later on in the year. With Prime Day having taken place on 13 October this year, it likely kicked off an even earlier discounting trend than usual.
“2020 has shown the importance of trading online and will likely have seen a number of brands turn their attention to eCommerce ahead of schedule. We hope that as many businesses as possible are able to survive past this awful year, and that consumer appetite is still high this Christmas.”
Protecting retail workers during Christmas is a priority
Workplace track and trace platform WorkSafe CEO and founder Freddie Talberg told Retail Insight Network: “The latest BRC figures of falling prices on the high street exhibit an inevitable drop in demand following a second lockdown. With non-essential retail reopening today and Christmas fast approaching, we have to ensure that retail workers are protected during the panic rush to buy presents.
“The high street is already suffering and so it is doubly important that businesses create safe working environments for retail workers, not just on the shop floor, but in the back processing rooms, in the manufacturing of products and in their supply chains.
“Workers have a right to be in adequately safe and socially distanced working environments, not only to ensure the health of this sector over the crucial sales period of December but also to protect the health of individual workers. We urge the government and major retailers to consider better tools to protect retail workers’ safety.”
Consumers need to be careful to not overspend this Christmas
Online price-tracking website Alertr retail expert and co-founder Andy Barr told Retail Insight Network: “There is a clear pricing war across retailers as they fight to present the most appealing deals in the run-up to Christmas.
“With many on the verge of administration and plenty having already reached that unfortunate stage, we are seeing a number of closing down sales where retailers are slashing their prices dramatically to get rid of the last remaining stock they have, or else dead stock that needs shifting.
“Though potentially alarming for the high street, this is great for consumers in the run-up to Christmas, as we wouldn’t normally see these types of discounts until the boxing day sales. We want to highlight though, that it is still important to only buy what you need and don’t be sucked into buying things for the sake of it being discounted. Stick to a budget so you don’t fall into the trap of overspending this Christmas.”