"People are still buying," says Tony Shiret, an analyst at CSFB, an investment bank. "But they are driving down prices. The middle to lower quality retailers are suffering really badly."
Figures from the Office for National Statistics show sales up in November by only 4 per cent compared with last year. Last year there were still fears of a recession, blamed partly on the Asian crisis, and fears of interest rate rises. The Asian crisis appears to have gone away, while interest rates have fallen by 1.25 per cent. Unemployment is at its lowest level for 20 years. House prices have soared. Britons are spending more than ever on holidays, computers and leisure goods. But sales of clothing, footwear, drink and food are only 2 per cent higher than last year.
Poor high-street sales can be blamed partly on the growth of the internet, which has seduced shoppers into staying at their desks to order Christmas presents. But online sales account for less than 1 per cent of total sales.
The gloom is also said to be caused by consumers spending their money differently. According to Menswear, an industry trade paper, the glory days of The Clothes Show are long gone. Apparently people would watch the programme on Saturday, then hurry to the shops on Monday to buy featured items of clothing. Now people watch cooking and gardening programmes instead.
Consumers are spending their money on new technologies such as mobile phones and computers, buying houses, eating out, or investing it.
Rather like the property boom, which is confined to certain parts of London and the South-east, some shops are doing well despite the unfavourable conditions.
Charles Tyrwhitt, the shirt maker, reports sales up 31 per cent on last year for October and November. Its online sales have doubled, now, amounting to 10 per cent of all purchases. "Christmas already looks like being considerably better than last year," says James Stewart, the firm's internet manager.
Czech & Speake, with its upmarket cosmetics shops, also reports strong growth. "Our sales are up by more than 15 per cent," says a spokeswoman.
On anecdotal evidence, some large retailers, such as Hennes & Mauritz, are enjoying a good Christmas. But Marks & Spencer is said to be struggling to maintain its volume of sales. Retail analysts claim that sales are down 20 per cent on last year's figures.
And Credit Suisse First Boston predicts a miserable summer for big chains such as Arcadia, Debenhams, Marks & Spencer, Next and Storehouse. It says that prices will fall by up to 10 per cent as deflation takes hold of the high street.