Shoppers around the country have been offered early Christmas presents by desperate department stores as retailers braced themselves for a difficult festive season.
Three days before a fall in the rate of VAT comes into effect, the latest gimmick to entice consumers into opening their wallets saw department stores in London's Oxford Street open their doors at 7am. For two-and-a-half frantic hours, shoppers were offered complimentary champagne and breakfast along with huge discounts, in a promotion involving more than 35 stores.
Jace Tyrell, of The New West End Company, which oversees promotion of the shopping district, said: "Obviously it's a very tough Christmas this year and we have seen an unprecedented amount of sales and discounts ahead of Christmas. But great news for shoppers, they are seeing some incredible bargains and this event is part of many others right up until Christmas."
In its pre-Budget report this week, the Government said that, from Monday, it would reduce the rate of VAT for 13 months, from 17.5 per cent to 15 per cent. But grim figures released yesterday showed consumer and retailer confidence falling to new lows. The Confederation of British Industry's (CBI) distributive trades survey balance – which measures sales across 20,000 retail outlets – slid to -47 from -27, much worse than the -35 forecast by economists.
John Lewis, widely seen as a bellwether for the health of consumer spending, reported weekly sales were down 13.3 per cent on last year. Sales of the company's Waitrose food group also sank by 3.9 per cent year on year in the week to 22 November.
On Thursday, Woolworths, a bastion of the high street that traditionally flourishes in the run-up to Christmas, had to call in administrators. The same is true of the furniture store MFI. Kingfisher, which owns B&Q, said third-quarter sales were down 9 per cent amid slowing demand for DIY products and home improvements. And DSG International, owner of Curry's and PC World, reported an interim loss of £29.8m, blaming a "tough and volatile" marketplace. Last week, Marks & Spencer announced a one-off discount of 20 per cent on all products in a bid to boost sales.
A spokesman for the British Retail Consortium said: "Retailers know that their customers' incomes are squeezed at the moment but at least they are responding, with big price cuts and promotion."
Nick Bubb, a retail analyst at Pali International, said: "The collapse of Woolworths could have the same effect on confidence that Lehman Brothers did in September. It reminds people just how bad things are, and there are a whole stack of retailer bankruptcies coming."
On Thursday, the Bank of England is expected to reduce interest rates by 0.5 percentage points, following last month's shock 1.5 per cent reduction to 3 per cent.
John Lewis: Christmas successes
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*Radley recycled umbrella: Sales up 70 per cent on last week
*Ugg boots: Sales up 300 per cent on same week last year
*Reindeer candle-holders: Up 65 per cent on same week last year
*Cashmere clothing: Up 4 per cent on last yearReuse content