Aggressive retailers slash price of clothes

There was a dramatic slump in the prices of clothes and footwear on the high street last month, according to official figures published yesterday.

There was a dramatic slump in the prices of clothes and footwear on the high street last month, according to official figures published yesterday.

Prices fell more than 7 per cent between June and July, the largest drop since records began in 1947, adding to the woes of both retailers and manufacturers.

The trend was led by womenswear retailers who slashed 11 per cent off their prices. The Office for National Statistics, which compiled the data, said: "This month saw huge discounting on a wide range of items, particularly summer clothes, at a range of high-street retailers."

Although part of the fall could be explained by poor weather and seasonal sales, prices were also 5 per cent lower than in July 1999, making it the largest annual fall on record. Clothes prices have fallen every month since the middle of 1998 as fierce competition has led to aggressive discounting by retailers.

John Wilson, director of the British Clothing Industry Association, said resistance by consumers to higher price tags, combined with cheaper imports because of the strength of the pound, had forced retailers to cut prices. The pressure has hit both profit margins and the share prices of once-powerful retailers such as Marks & Spencer and Arcadia, owner of Burtons and Top Shop, he said.

"There is a revolution on the high street. The public have taken the view that the middle range of retailers, which has the dominant sales impact, is not where they want to buy their clothes from," he said.

The slump in prices and margins has also hit jobs. The number employed in the clothing and footwear sector has halved from 581,000 in 1988 to 292,000 now.

But Mr Wilson said he had detected signs of a "marginal improvement" for the industry. In June Stephen Byers, Secretary of State for Trade and Industry, unveiled a 12-point plan for the sector, which will get a boost from the up-coming London Fashion Week. "We have top designers who are doing very well," Mr Wilson said.

Fierce competition on the high street depressed other items; the cost to the shopper of household goods fell 1.6 per cent on the month and leisure goods fell 0.9 per cent.

The British Retail Consortium, the sector's trade body, said the figures confirmed the trend in prices was clearly downwards. "It is very good news for the consumer," saidAnn Grain, a spokeswoman. "This is not rip-off Britain." She said the BRC's index showed prices of 200 of the most commonly bought goods had fallen consistently over the last three years.