View from City Road: Quality rather than quantity in high street

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The message from yesterday's crop of Christmas trading statements seems simple enough; the 1990s consumer is willing to be ripped off, but only in moderation. While present buyers balk at paying pounds 129 for a computer games console, pounds 5-odd for a shrink-wrapped basket of elderflower and palm oil body lotions from Boots is rather more acceptable.

Computer games are simply the latest in a long line of fads, from camcorders to microwaves, which have produced boom and bust cycles for the retailers. But the 9 per cent increase in the rest of Dixons' business, together with the 7.2 per cent rise for Boots, suggests there is no reason for the City to be alarmed about Christmas trading. The retail sales figures, due out on 19 January, are likely to confirm that it has been respectable, if not as spectacular as some suggest.

That does not mean retailers can relax and enjoy the recovery. Shoppers have been accustomed to voting with their purses; persuading them to part with their money is likely to become harder, rather than easier. That means value for money, rather than constant sales; decent service rather than disdainful shop assistants; and tailoring products to suit the shopper rather than the shop.

The better retailers - like Marks & Spencer, Sainsbury and Kingfisher - have already realised that and are enthusiastically espousing the new buzz phrase of everyday-low-pricing. Their hope is that the strategy will generate extra sales to compensate for the margin sacrificed with lower prices. The problem is that everyone is jumping on the bandwagon - and even rock bottom prices will only expand the market by a modest amount.

That means the recovery, particularly if it remains pedestrian, is likely to sort out the men from the boys just as thoroughly as the recession did. Those who spotted the change in consumer attitudes early, and have the management skill to exploit it, are likely to benefit most. But the winners, at least in the short term, will be shoppers not shareholders.