Shoppers lured into the shops by huge price cuts in the post-Christmas sales have been told that 2009 will be a year of heavy discounting and special offers as retailers encourage them to spend.
Richard Dodd, spokesman for trade body the British Retail Consortium (BRC), said: ‘There’s no indication that fundamentals are going to change so customers will go on being reluctant to spend and retailers will have to go on offering big discounts and promotions in order to tempt them in, which is very difficult for retailers.’
Falling house prices
Rising unemployment, falling house prices and economic gloom were said to have curtailed festive spending which is expected to be lower than Christmas 2007 when figures are released next month.
Another national chain, childrenswear retailer Adams, looks likely to become the latest victim of the retail squeeze after Price Waterhouse Coopers confirmed it had been approached to act as administrator. The company – which makes clothes for Boots – has around 260 stores in the UK and is understood to employ around 2,000 people.
High street icon Woolworths has already gone into administration, while MFI, Zavvi, Whittard of Chelsea and The Officers Club all collapsed in the run up to Christmas – although Whittard and The Officers Club were sold on.
Mr Dodd said: ‘The key question is how much people are actually spending. They are being very cautious. Generally speaking, retailers have had to do an enormous amount to tempt people in.’
He added that the good sales turnout and ‘a last-minute surge’ before Christmas were unlikely to have compensated for the ‘long, difficult build-up’.
There was some good news from the high street when department store giant John Lewis announced a record first day’s trading for the start of its clearance sale. Stores took £21.3 million on Saturday – up 7% on the same day last year.
John Lewis managing director, Andy Street, said: ‘This is a remarkable result at any time and particularly so in this challenging economic climate.’
John Lewis was the runner-up in this year’s Which? Awards Retailer of the Year category (second only to its sister company Waitrose) and was the winner in 2007’s awards.
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Copyright Press Association 2008