This year's extended Christmas holiday, with many people off work until 4 January, means that shoppers could be out in force over the coming week and spending freely.
Many retailers make half or even three-quarters of their profits in the two months leading up to Christmas, but hopes of a last-minute rush appear not to have been realised. Experts in the City are expecting a rash of profit warnings in January from retailers, led by Marks & Spencer, which has had a terrible trading year.
Despite a booming consumer economy, double-digit house price inflation, unemployment at a 20-year low and employment at an all-time high, consumers have held back from an 1980s-style spending spree. The problem for retailers is that while sales volumes have stayed reasonably robust, price rises have been minimal and in some cases, shops have been forced to cut prices. In the run-up to Christmas, stores, such as M&S, C&A and Bhs, launched "pre- Christmas sales", cutting up to a third off leading items.
The latest official figures showed shops sold 4.1 per cent more goods in November than a year ago but the value of sales was only 3.3 per cent higher.
The figures also showed that prices had fallen 0.9 per cent over the last year, squeezing retailers' profit margins. Clothing retailers have suffered the most: while the value of household goods sales is 8 per cent up on a year ago, clothing and footwear sales have risen by just 1 per cent.
Pressure to discount has also come from competition from Internet traders, who can offer cheaper prices because of their low overheads, the entry of US-style trading methods as seen in the takeover of Asda by WalMart, and consumer awareness of the Government's campaign against "rip-off Britain".
Richard Hyman, chairman of the independent analysts Verdict Research, said: "We have said all along that November would be awful and the first two weeks of December would be just as bad. But we believe the millennium effect will kick in and that will save the retailers from having had a very poor Christmas." He said the "unprecedented" number of days off work, combined with the millennium celebrations, meant that people would spend more on entertainment, especially on food and drink.
But in a report published today, the Centre for Economics and Business Research (CEBR) forecasts that consumer spending in January will be just 4.1 per cent up on last year - the lowest year-on-year rise since October 1998 when many people were forecasting a global recession.
It said the new year sales were likely to "fall flat" as the country recovered from a "millennium hangover". And it warned that a pre-millennial spending spree would leave retailers short of stock. CEBR's chief economist Douglas McWilliams said: "The mismatch between consumer confidence and retail hesitance in the run-up to Christmas is going to leave January bargain-hunters a little disappointed."
Despite the gloomy forecasts, those stores that opened yesterday appeared to have been well rewarded. Three dozen people were queuing outside Courts, the furniture retailer, in Staples Corner, north London, before trading began. A spokesman said: "The shop is packed. People are buying everything - electrical goods, suites, beds. Business is booming and better than before Christmas."
However, a survey published yesterday demonstrated an increased disillusionment with "sales". More than half of the 998 people questioned in a B&Q survey were aware that retailers put up prices before a sale, so they could discount heavily during sale periods, and two-thirds felt that most of the contents of a sale were specially purchased for the event. A third believed the sale goods they bought did not offer good value.
Stephen Robertson, marketing director of B&Q, said: "We predict that sales will soon be a thing of the past, rather like lunch-time and early Wednesday closing."
BEST FOR THE HOME
Carden Cunlett, 83 Westbourne Park Road, LondonW2, 0171 229 8559. Sale from 11 to 25 January.
Designers Guild, 267 King's Road, London SW3, 0171 351 5775; 6 Relay Road, Anel Way, Wood Lane, London W12. Sale dates to be confirmed.
Jerry's Home Store, 163 Fulham Road, London SW3. Sale from today to 31 January.
The Holding Company, 241-245 King's Road, London SW3, 0171 352 600; Bluewater Shopping Centre, Dartford, 01322 387 400; 41 Spring Gardens, Manchester M2, 0161 834 3400. Telephone for mail order on 0171 610 9160. Sale from tomorrow to 31 January.
Monogrammed Linen Shop, 168 Walton Street, London SW3, 0171 589 4033. Sale from 4 to 31 January.
Mulberry Hall, Little Stonegate, York Y01, 01904 620 736. Sale from 6 January to about mid-February.
David Mellor, 4 Sloane Square, London SW1, 0171 730 4259.
The Round House, Hathersage, Derbyshire, 01433 650 220. Sale from 8 to 22 January.
Christopher Wray, 591 King's Road, London SW6, 0171 736 8434. Branches through the UK. Sale on now to about mid-January.
Molton Brown, 58 South Molton Street, London W1, 0171 499 6474. Sale from today to mid- January.
Graham and Green, 4, 7 and 10 Elgin Crescent, London W11, 0171 727 4594; 164 Regent's Park Road, London NW1, 0171 586 2969. Sale from 7 to 31 January.
Heals, 196 Tottenham Court Road, London W1P, 0171 636 1666. 27 December to 23 January; 234 King's Road, London SW3, 0171 349 8411; Tungsgate, Guildford GU1. Sale from today to 16 January.
Back2, 28 Wigmore Street, London W1H, 0171 935 0351. Sale from 7 January to mid- February.
Simon Horn Furniture, 117-121 Wandsworth Bridge Road, London SW6, 0171 731 1279. Sale from 4 to 31 January.
Harrods, Brompton Road, Knightsbridge, London SW1X, 0171 730 1234. Sale from 5 to 29 January.
Liberty, Regent Street, London W1 0171 734 1234. Sale from today until further notice.
John Lewis, Oxford Street, London W1A, 0171 629 7711. Sale from tomorrow to 11 January.
Same, 146 Brick Lane, London E1, 0171 247 9992. Sale from 4 to 30 January
Harry Corry, 45 Royal Avenue, Belfast BT1, 01232 320 721. Sale until end of January.
Laura Ashley, 9 Castle Court, Royal Avenue, Belfast BT1, 01232 233 313. Sale from today to end of January.
Habitat, 1-9 Donegall Place, Belfast BT1, 01232 237 020. Sale from today to end of January.
Habitat, Buchanan Galleries, Glasgow G1, 0141 331 2233. Sale from today to end of January.
Frasers, 21-59 Buchanan Street, Glasgow G1, 0141 221 3880. Sale now on.
Linens Fine, The Courtyard, Princes Square, Buchanan Street, Glasgow G1, 0141 248 7082. Sale reopened yesterday.
Harveys Furnishings, 146-152 Trongate, Glasgow G1, 0141 552 7373. Sale started yesterday.
Habitat, 38 Briggate, Leeds LS1, 01132 449 036. Sale from today to end of January.
House of Fraser, 140-142 Briggate, Leeds, LS1, 01132 435 235. Sale from today to end of January.
Harvey Nichols, 107-111 Briggate, Leeds, LS1, 01132 048 888. Sale starts today.
Habitat, 13 St Anne's Street, Manchester M2, 0161 835 3612. Sale from today to end of January.
Kendals, Deansgate, Manchester M60, 0161 832 3414. Sale from today to end of January.
The Holding Company, 41 Spring Gardens, Manchester M2, 0161 834 3400. Sale from tomorrow to end of January.
Lloyd Davies, 14 John Dalton Street, Manchester M2, 0161 832 3700. Sale from today to end of January.