Prices slashed in Christmas finale

Susie Mesure,Retail Correspondent
Monday 18 December 2006 02:04 GMT
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Retailers will make their final pitch to Christmas shoppers with savage discounts this week in a last-ditch attempt to stimulate sales.

The next seven days will make or break the year for many of the country's biggest chains as the high street's final countdown to Christmas kicks off.

Analysts believe this festive trading season will see the high street divide sharply into winners and losers - as any wander over the weekend around the nation's shopping centres and retail thoroughfares revealed.

There is a clear distinction between those retailers able to protect their profit margins by limiting their promotions to bulk discounts - as Marks & Spencer is doing - and those forced into slashing their prices by 50 per cent and more.

Many of the chains under the control of Iceland's Baugur, including the womenswear chain Whistles and the shoe retailer Nine West, are among those to have halved the cost of shopping in their outlets.

A study by Ernst & Young, the consultants, has found that retailers are relying on fewer but deeper discounts to drive sales. Footwear and entertainment retailers are the worst culprits, but price cuts across the high street are on average 5 per cent deeper than last year, the report said.

Jason Gordon, senior manager for retail at the firm, said it was a "matter of when, not if," retailers ratcheted up the level of discounting in response to "significantly lower footfalls than last year".

The latest shopping traffic data from Footfall, which measures UK retail traffic, showed that the number of shoppers out from last Monday to Thursday dropped by nearly 7 per cent against the same four-day period last year.

Figures from SPSL, which also measures shopper traffic, showed that for the Saturday just gone, 2.1 per cent fewer shoppers hit the high street, although the figure was fractionally up on the previous Saturday.

"Consumers know they can afford to play a waiting game because retailers need their business. They just hang around until retailers give away some margin that suits their pockets," Tim Denison, a director at SPSL, said yesterday.

This Christmas will be a big test of consumers' appetites for credit-card debt. In previous years, the amount borrowed to fund the festive splurge has increased but consumers have begun paying back some of their debt during 2006.

The high street will be helped this week by the fact that tomorrow is the cut-off date for ordering most goods online for pre-Christmas delivery. Analysts have attributed much of the high street's softness to the fact that people have shopped from home over the internet.

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