Shops have cut prices by up to half in the approach to Christmas in an attempt to coax reluctant shoppers back to the high street.
Marks & Spencer, Debenhams, House of Fraser and HMV are all running promotions in the face of a fall in the number of shoppers and a boom in online shopping. A feature of this year's discounting is the "short sharp sale" exemplified by WH Smith's 10 per cent off day last week.
Until tomorrow, bicycles are half price at Woolworths, Selfridges has 30 per cent off Christmas decorations and Debenhams has 10 per cent off everything. Analysts predict there will be more aggressive promotions in the next three weeks unless shoppers return to the high street in large numbers.
According to the retail analyst Footfall, there were 15 per cent fewer shoppers last weekend than on the same weekend last year. It put the weekly fall at 9 per cent.
People are increasingly doing their shopping online. The Internet Media Retail Group forecasts £7bn sales in the 10 weeks to Christmas - 40 per cent up on last year.
The British Retail Consortium predicts total retail spending will hit £33bn this month, a rise of 6 per cent on 2005. Yet retailers are nervous that people may suspend their shopping until the few days before Christmas Day when, in recent years, they have been forced into panic discounts.
"For retailers it's going to be a white -knuckle ride and keeping your nerve is going to be important when it comes to making a decision about cutting prices," said Kevin Hawkins, director general of the British Retail Consortium. "There was plenty of discounting last year but December did not turn out too bad - in fact it was the best month of a terrible year."
Although the economy is buoyant with employment high and a property boom, there are several reasons depressing consumer demand. Householders have been hit by soaring utility bills, interest rates have risen and pay rises have moderated.
Despite that, a survey by Deloitte suggested people would spend less on socialising this Christmas and more on presents. The business services group predicted gift buying will jump 22 per cent to £16.9bn - or £378 per person.
With so much money at stake, retailers are taking no chances in encouraging customers into their stores.Reuse content