Analysts warn against discounting in downturn

Relying on impulse purchases will seriously damage business prospects
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Analysts have warned that slashing prices will not work as a method for driving sales if the expected retail downturn comes to pass.

Nick Bubb, an analyst at Pali International and a member of retail think tank KPMG/SPSL warned that consumers will not purchase on impulse in a downturn – which is exactly what price cuts are designed to drive.

"People are sated by bargains. They will not buy things in 2007/8 that they don't need, simply because they're cheap," he said.

"Retailers who are successful now and will be successful in a downturn are not necessarily the slash and burn discounters," he added.