Marks & Spencer has fired the starting gun on what is being billed as the “sale of the century” after the high street lockdown wiped out an entire season for fashion retailers.
Retail analysts believe there could be around £15bn worth of stock up for grabs and there will be “wall-to-wall” sales for the rest of this year after clothing stores were forced to shut just after stocking up with spring and summer fashions.
One industry insider told the Guardian that warehouse storage space is more than 90% full and some retailers have been storing container-loads of summer fashion in locations such as railway sidings and on former Ministry of Defence land due to the lack of space and the exploding cost of storage in ports – from about £20 per container a day to more than £100.
M&S has dressed up its price cuts, which start at 50%, as a “rainbow sale” – and is handing 10% of takings to NHS charities. But the retail group has told the City that its clothing and homewares business had been “severely constrained during lockdown”.
Next, one of the high street’s strongest performers, which banked profits of £600m last year, has warned that it could suffer losses of £150m on the back of the shutdown.
Already, Topshop, Miss Selfridge and French Connection are offering discounts of up to 50% online, Debenhams up to 30% while New Look and Moss Bros have discounts of at least 25%.
Sofie Willmott, a retail analyst at GlobalData, said: “All the stock has been sitting in stores since the end of March gathering dust and some of it won’t have been brand-new then. Retailers are going to want to shift that. They are going to have to reduce the amount of stock in stores.”
“The level of discounts is going to be massive [when stores open]. There were lots of discounts going on before the lockdown and there are discounts going online now.”
She suggested that brands such as Ted Baker and Moss Bros might face a particular challenge because they were focused on smart clothing for events and office wear which are now far less in demand as many people work from home and weddings are cancelled.
John Lewis is poised to launch another round of fashion discounts in the coming days even though the department store chain has only just finished a 30%-off deal. Heavy discounts on fashion brands such as Joules, Hobbs and Reiss are already available on its website.
Industry insiders believe Primark is planning to mark its return to the high street with massive discounts, which could include buy-one-get-one-free bonanzas.
One senior fashion insider said some retailers would suffer more than others: “It depends how much stock you bought and we still have June, July and August. But we have missed the best two months of the season and there will be no high season or holiday shop – because there will be no holidays.”
The stock mountain was just part of the grim picture on the high street, the executive said: “The problem is not now. It is how you reopen and pay all your bills. If 25% of fashion retailers were in turmoil before [coronavirus], it has got to be 60%-70% now. At the time we locked down, fashion businesses had just stocked up. If you have got some good stuff, you can box it up, but not if you need the cash to pay your suppliers. Then you have to turn it into cash and you will get a lower margin for it.”
Independent retail analyst Richard Hyman said: “I think there will be wall-to-wall promotions for the rest of the year.” He estimated that £10bn–£15bn worth of spring and summer clothes were sitting in shops and warehouses and said the tough economic backdrop meant “persuading people to part with their money would be really hard”.
Non-essential stores are expected to start opening next month, but retailers will have to balance managing social distancing with trying to clear the decks. They also fear government-imposed limits on discounting. In Spain, where some non-essential retail outlets were allowed to open earlier this month, the authorities blocked retailers from any discounting activity that might draw a crowd.
It is also not clear how keen shoppers will be to return to the high street. Analysts say retailers had been buoyed by stronger than expected sales in countries, such as Germany, which had reopened shops in recent weeks, but UK shoppers may not be so bold.
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