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Jeremy Warner: Downturn will sort the retailing wheat from the chaff

Outlook And they are off. The start of the Christmas trading update season has brought relatively good news from the high street, or at least news that was not nearly as bad as some had been forecasting. Debenhams was down "just" 3.3 per cent in the 12 weeks to 3 January while the fashion chain New Look was actually up 2.8 per cent in a similar time frame. Even Next, which resisted the trend to discount sales in the run-up to Christmas, was down by "only" 7 per cent on a like-for-like basis, which in these markets counts as almost respectable, though this was over a longer time frame and may therefore disguise double-digit falls in November and December.

You won't see anything like as bad as the 15 per cent plunge in sales some bears are forecasting for Marks & Spencer when it releases its update today. As for the 1,000 expected job losses, in good times these would have been thought just good housekeeping for a company with more than 70,000 employees. In any case, as Simon Wolfson, chief executive of Next, says, it's hardly Armageddon.

It's no wonder that even if you had the money for a shopping spree over Christmas, it was impossible to find anything to buy in the shops. All these companies anticipated a bad Christmas, and therefore kept stocks under tight control, so as not to be forced into even deeper, stock clear-out discounting in the new year.

Mr Wolfson summed up the prevailing mood by saying it was bad, but not that bad. Nor did he anticipate total meltdown on the high street, which give or take a few insolvencies he expected to look much the same in a year's time as it does now.

Maybe, but he'd be a fool if he hasn't planned for an exceptionally difficult year. Thus far, consumers have been trimming their expenditure and abandoning big-ticket purchases, but not until they start losing their jobs en masse will you see the real damage to demand. Over the next few months, the pain will ratchet up. The good news for those that can stay afloat while all around them are sinking is that, once the storm has subsided, there will be far fewer ships on the sea with which to compete.

Mr Wolfson may be right in thinking the high street won't look much different, but for the survivors the 15 per cent vacancy level for retail space Experian anticipates by the end of the year means the pick of the sites and the customers. Survivors like recessions. It makes them more dominant still.