United Kingdom

Sale of the century: UK's beleaguered shops prepare to open their doors

Drastic price cuts caused by the coronavirus crisis have begun even before shops open their doors, according to figures released today.

Prices in May fell at the fastest rate since records began in 2006, according to the monthly data from Nielsen and the British Retail Consortium.

The widespread discounting, at a time when shops would normally be selling at full price, has been dubbed 'sale of the century' by experts.

Prices in May fell at the fastest rate since records began in 2006, according to the monthly data from Nielsen and the British Retail Consortium

Desperate stores are competing to shift mountains of stock that have built up since the lockdown was imposed on March 23, to bring in cash to survive the crisis.

The price of non-food items such as homeware, toys and books, fell sharply by 4.6 per cent in May, compared to a decline of 3.7 per cent in April.

Clothing and furniture saw the biggest drops as retailers 'ran promotions to encourage consumer spending and mitigate recent losses', the BRC said.

Overall shop prices fell by 2.4 per cent in May, the highest rate of decline for at least 14 years, following a 1.7 per cent decline in April.

It means the pace of price deflation has increased substantially compared to the 0.7 per cent average over the last 12 months.

Food prices are rising steadily at a rate of 1.5 per cent due to higher business costs, the implementation of social distancing measures and labour shortages, although price rises will now be tempered as home-grown produce comes into season.

The collapse in non-food prices comes as retailers struggling to pay their bills desperately seek to tempt shoppers to part with their cash.

They are benefiting from business rates relief and the Government's wage subsidy scheme but most still have to pay for rent, overheads such as utility bills, and committed stock orders.

Helen Dickinson, chief executive of the British Retail Consortium, said: 'Even as non-essential shops begin to reopen from June 15, consumer demand is expected to remain weak and many retailers will have to fight to survive, especially with the added costs of social distancing measures.

'Retailers face an uphill battle to continue to provide their customers with high-quality and great-value products despite mounting costs.

'Government support remains essential, both to rebuild consumer confidence and to support the thousands of firms and millions of jobs that rely on it.' The crisis on the High Street has already led to Cath Kidston, Debenhams and Laura Ashley going bust.

Shut: Retailers up and down the country have been forced to shut their doors

Retailers saw their share prices hammered as the lockdown came into force, with stores closing and shoppers stopping spending.

High street success story Next, which has a successful online business, saw its share price fell 52 per cent from 7128p to 3390p, but has now recovered to 5402p on the news shops can reopen. 

Marks & Spencer's share price collapsed from 163p at the start of March to an all-time low of 85p, despite its food business remaining open.

The desperate bid to sell clothes and retain cash reflects the decision by dozens of shopping chains to slash dividends. 

M&S and Primark's owner, AB Foods, have both slashed dividends, while Frasers Group, which owns House of Fraser and Sports Direct, suspended its share buyback.

Dozens of major names in retail are expected to remain shut when the lockdown is lifted on June 15, including some Topshop, Clarks and John Lewis stores.

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