Januar-E-sales

**The January sales following the Christmas period seem as natural as a
Christmas pudding succeeding the turkey on Christmas day.** Both are
typically seen as the traditional way of doing things at Christmas,
manifested in the winding queues of bloated bellies on January
mornings. Yet, the nature of the January Sales as we know them is
changing.

The explosion in technology in recent times has caused the operation
of markets themselves to change. In other words, a small invention
called the Internet – and its good friends Amazon, eBay and the rest –
are consistently undercutting the prices of high street stores,
eroding stores’ profit margins to the point where these January Sales
appear to be a year-long occasion (think DFS sale).

While we may applaud it, the Internet frustrates storeowners for two
main reasons. First, it has single-handedly made the prices of goods
much more transparent: consumers only need to spend a few minutes
comparing prices online, rather than spend a chunk of their budget on
transport to the big cities, and an even bigger chunk of their day
wandering between shops to find the best deals. Thus, a ‘SALE’ poster
in the window is no longer sufficient to fill stores with consumers
and as a result, they are relatively empty.

Second, the Internet has brought with it the emergence of giant online
retailers. Consumers consistently turn to the likes of eBay and Amazon
for the best prices, at the expense of high street leaders such as
John Lewis and Debenhams. It brings little surprise that technological
gains, and the resulting cheaper prices of goods, have undercut the
significance of the ‘shopping experience’, and consequently stumped
the performance of high street stores.

In the past few years, influenced by the dismal performance of the UK
economy, traditional stores have tried to beat the online giants to
the punch by slashing prices well in advance of Christmas itself. Yet
this strategy was stymied by the dangerous mix of unhealthy profit
margins, and low consumer confidence amid a time of job cuts and
falling output. Left with large quantities of unwanted stock, some
retailers (namely La Senza, Blacks and Game) all fell short of the
mark, and sank.

This year, however, with the economic optimism brought about by the 1
per cent growth in GDP in the last quarter and falling unemployment,
traditional firms could, and should, keep their guards up for longer.
If these retailers have truly learned a lesson from the previous
Christmas periods, then prudency regarding quantities and the type of
stock itself may leave bargain hunters anticipating the January sales
once again.

If not, early price wars between firms will lead to a race to the
bottom, resulting in more financial casualties for retailers in the
New Year