The objective of most retailers is to maximise full-price sales with the highest possible margin throughout the year. There are, however, two fundamental obstacles to achieving this. The first is that, with a few exceptions like the DIY and furniture sectors, sales, and therefore profits, are skewed towards the fourth quarter of the year in the run-up to Christmas. This is particularly true of department stores, where it accounts for a third of turnover, electricals retailers and booksellers. Obviously anything that they can do to raise sales outside Christmas will help them to make more efficient use of their infrastructure of stores and warehouses etc as well as getting the most out of their permanent staff, who might otherwise not be fully occupied at all times of the year.

The objective of most retailers is to maximise full-price sales with the highest possible margin throughout the year. There are, however, two fundamental obstacles to achieving this. The first is that, with a few exceptions like the DIY and furniture sectors, sales, and therefore profits, are skewed towards the fourth quarter of the year in the run-up to Christmas. This is particularly true of department stores, where it accounts for a third of turnover, electricals retailers and booksellers. Obviously anything that they can do to raise sales outside Christmas will help them to make more efficient use of their infrastructure of stores and warehouses etc as well as getting the most out of their permanent staff, who might otherwise not be fully occupied at all times of the year.

The second obstacle is that retailers have to hold Sales in order to clear surplus stock, unbought by consumers because it is the wrong colour, size, design, price, out of fashion etc. This entails considerable cost in terms of lost margin.

During late 2004 and 2005 especially, retailers have come under significant pressure from a slow down in consumer demand and industry overcapacity in a way that has left most carrying surplus stock. With improved systems enabling them to monitor stock levels ever more accurately, they have been keen to clear any excess as soon as it arises, leading to virtually continuous Sales activity in the form of one-day spectaculars or extended mid-season discounting.

This report aims to look at the underlying drivers of seasonality in shopping, how they are changing and how retailers are coping with or exploiting this. It also considers how shoppers are reacting to rising numbers of discounting events, whether they see this as a positive or negative thing, and how it is affecting the potential for full-price purchases at normally peak times of trading.