COO at Booths warns of retail bloodbath

Chris Dee, chief operating officer at the family-owned upmarket retailer, told the Yorkshire Post that the post-festive period is “going to be a bloodbath”.

He said consumers in general are holding back on spending in the expectation that retailers will panic and reduce prices.

But grocery prices are “absolutely the cheapest” and “deals are the strongest they have ever been”, he said.

Mr Dee added: “I can’t see how things can get any better for consumers.”

Retailers use the period between the start of the new year and Easter to discount goods.

At a time of the “highest-ever” promotional activity, with 40 per cent of all sales related to promotions, Mr Dee predicted that “it will be very difficult” for some retailers, particularly those on the high street.

He said: “I think we will see significant price competition from everyone in the grocery sector. It’s a balancing act for both retailers and their suppliers.

“Ultimately, the way things are going that will be very challenging for some businesses as to whether they can continue to work with such cut-throat margins.”

Booths, led by chairman Edwin Booth, has 29 stores across the North of England, including three in Yorkshire at Ilkley, Settle and Ripon.

This week, the chain said it has seen a 26 per cent increase in pre-orders for Christmas.

Mr Dee said the figures pointed to a return to customers demanding high quality food over discounting price battles this Christmas.

“We want to trust that we are going to have a great day with our family around,” he added. “It’s a day when you can’t get anything wrong. That drives people to more quality products and quality retailers.”

He said some consumers are “definitely trading up”.

Another reason for the increase is the timing of Christmas Day, falling on a Tuesday this year as opposed to a Sunday last year.

“Because Christmas is two days later in terms of days in the week it feels like people have left it even later,” said Mr Dee.

“Last year it felt like there were two weekends and this year it is one weekend. It’s a real dilemma of timing.”

Like other grocers, he warned about the impact of Sunday trading restrictions on December 23, one of the busiest shopping days of the year.

He admitted concerns about “whether we would be able to serve customers the way we want”.

Founded in 1847 and based in Preston, Booths reported “modest” sales growth of 1.3 per cent to £273m in the year ending March 2012.

Trading profits fell 22 per cent to £6.8m as price cuts hit margins.

Mr Dee, from York, has been chief operating officer since February. He has been with the group for 17 years. Asked about the company’s online strategy, he said: “Our strategy is not to do it. We believe that shopping for food should be an experience in a store.”

Customers want fresh food served by knowledgeable staff, Mr Dee added.

“I don’t believe you can replicate that experience online,” he said.

He added that none of the big supermarket groups nor Ocado could demonstrate that online grocery shopping is profitable.

He said the model is “still unproven.”