Certainly the last three most relevant indicators of the state of the UK high street make grim reading:

Office for National Statistics (May 2012 results): “Sales values fell by 3.2%; the largest drop since records began in 1988”

CBI (June 2012 results): “Weak consumer confidence and uncertainty over the economic outlook are still putting a brake on consumer spending across the whole retail sector”

British Retail Consortium (June 2012 results): “The soggy celebrations over the Jubilee weekend itself, which heralded the start of the wettest June on record, were followed by far weaker business for the rest of the month”

Retailers are inevitably reacting by discounting ever more heavily. A recent PricewaterhouseCoopers survey indicated that circa 75% of all retailers were recently on sale or advertising promotions. Of these retailers, the average discount offered was a staggering 47%. However, consumers are being hit by so many negative factors at the moment that pure discounting will not tempt them out into the stores again alone.

The negative factors are virtually endless (you can add your own too I am sure):

• Job insecurity
• Negative business press headlines
• Appalling weather
• Static/declining housing market (the most recent RICS survey highlighted 22% more surveyors recording house price decreases than increases)
• Ongoing declines in real salaries (ie. inflation rising faster than wage rises)

And so on and so on. Overall, consumers have too successfully (for retailers’ liking) kicked the spending habit that was prevalent up until about 2008.

However, shoppers are still out on the high streets and in the shopping centres (we are talking about the UK’s favourite leisure activity here after all) and retailers need to employ all the tricks of their trade to get them in the store and then spending with them as opposed to a competitor. Discount upon discount as the only tool is confusing to consumers and viewed cynically in the end. Much more successful strategies are likely to be around:

• A “joined up” strategy which links the store proposition to a compelling internet/mail order offer
• A USP (“Unique Selling Proposition”) which consumers emotionally buy into
• Concentrating on “value for money” rather than lowest price

A final thought. Reducing store staff costs can be an extremely short-sighted approach. Nothing is more likely to prevent me making a considered purchase than looking in vain for a retail member of staff for assistance. How about you?