London or New York, Retail Discounts Are Steep This Holiday Season
New York has nothing on London — that is in terms of the holiday promotional environment.
Different country, same story.
Whether it is Regent Street or Herald Square, the name of the game is deep discounts. The markdowns in New York and London are driven by the same motives.
First, consumers are feeling the same heat: inflation , jobs and morale. As a result retailers are in a frenzy to maintain or gain market share albeit at a cost.
Second, N.Y. and London consumers have not been feeling the heat (in a literal sense). Unseasonably warm weather in both cities has left retailers with piles of coats, gloves and sweaters. And the window of opportunity is closing as we approach Christmas.
In London, promotions started early this year. Considering locals were walking around in shorts and T-shirts mid-October, retailers pushed the 50-percent-off panic button as early as the end of October. And it did not really do much. Weather coupled with an outlook for a flattish holiday season has sent discounts into overdrive in recent weeks.
I hit the stores over the past week and was not disappointed with the bargains. Gap has no shortage of 50-percent to 60-percent off sweaters, coats, scarves and hats. Banana Republic? Ditto. Uniqlo is having a tough time of it with cashmere and coats 40 percent off.
Stock is plentiful and I am guessing there are more discounts to come.
Local retailers tell pretty much the same story. Debenham's is running up to 60 percent off seasonal merchandise. La Senza has "half off" a majority of store or "two-for-one" deals. At Kurt Geiger and Hobbs and Whistles, it's 50 percent off. John Lewis, the bellwether for U.K. retail, is also running 30 percent off coats, but the real deals start on Dec 27.
If I had not just spent eight hours on a plane, I would think I was still in New York.
So the question is who wins and who loses? Again same story, different country.
Sales in London are bifurcated — similar to the U.S. value-hunting on one end (H&M,Forever 21, Topshop, Debenham's all packed). And the discounts at the majors are working. And for the few that are not promoting heavily? The consumer is not bothering.
On the other end of the spectrum, the high-end continues to chug away. For example, the line to get into the Louis Vuitton concession in Selfridge's (think Saks or Bloomingdale's ) was 25-people deep.
And then there is Harrod's if you are brave enough. This store not only tells a tale about the continued strength at the high-end, but it also highlights just how important the Chinese consumer really is globally. After installing Chinese bank card terminals in Knightsbridge, tourists have increased their spending to $5,700 per visit.
In addition, the Chinese are now the most significant consumer at Harrod's. Burberry is also reporting sales in the U.K. to Chinese tourists make up 30 percent of the total. Sounds familiar as we have heard a similar story recently from Coach , Ralph Lauren and Tiffany .
London may be 3,500 miles away from New York, but the story is very much the same.
Stacey Widlitz is the President of SW Retail Advisors Inc. She has worked at UBS, SG Cowen, Fulcrum Partners and in 2005 was one of three analysts to launch the Research Department at Pali Capital, where she covered Retail and Home Video for 5 years.