Dutch clothing retailers are engaged in a race to the bottom by slashing prices and starting their sales earlier than ever, according to a new report by ABN Amro economists.

Almost four out of 10 consumers say they prefer to shop at sale time and the price war is having a ‘disastrous effect’ on the retail sector, the new report says.

The bankruptcy rate among clothing retailers has gone up from 0.45% in 2007 to 0.83% in 2012 and is expected to hit almost 1% this year, ABN Amro’s Michel Koster told the Financieele Dagblad.

Sales volumes fell 11% in 2012 and were down a further 10% in the first quarter of this year. With summer sales starting in May, volumes are expected to fall even further in the second quarter.