Bargain hunters face thin pickings

BARGAIN hunters in the January sales are facing disappointment after a bumper Christmas season has cleared stores of stock. Retailers trimmed orders after 11 September because of fears of a slump in demand. But unexpectedly high spending in November and December has emptied stockrooms.

'There is not much left for the sales in January,' said Bridget Rosewell, chief economic adviser to the British Retail Consortium.

Retailers are celebrating an estimated pre-Christmas spending boom of £46bn - from £43bn in November and December last year.

'There is no doubt that retailers cut their pre-Christmas orders after the warm weather and the tragedy of 11 September slowed consumer spending in early autumn,' added Rosewell. 'Since then it's turned out far better than any retailer expected.'

A combination of the lowest interest rates for 37 years, robust house prices, low inflation and confidence over the war against terrorism fuelled the pre-Christmas boom.

The Bluewater shopping centre in Kent, for example, is forecasting a 10% rise in business-on last year and expects £220m to have gone through its tills in the eightweek run-up to Christmas. A knock-on effect of the boom is that more people have visited the centre mid-week to avoid weekend crowds.

According to a survey by Deloitte & Touche, UK consumers will spend an average £744 per person on presents during the Christmas season, up 1.5% cent on last year. Sectors that have particularly benefited include electronic goods - particularly DVDs and computer games - household goods, toys and clothing.

Many fashion chains are expected to report sales up between 7 and 12% on last year when they release trading statements in January. Among the sectors doing less well are mobile phones, jewellery and travel. The market for luxury goods has also seen a downturn in the wake of falling numbers of travellers following the US terrorist attacks.

Marks & Spencer has enjoyed an exceptionally good season. Its sales of general merchandise have grown substantially and are likely to beat the increase seen in its food operation for the first time since Luc Vandevelde took over as chairman almost two years ago. Womenswear has been particularly successful, with sales in one recent week said to be up 20% on the same time last year.

Food groups are also having a good December, with some supermarkets claiming double-figure percentage growth over the past month. But retail experts are warning investors not to get too carried away. Analyst Verdict estimates pre-Christmas sales up by 6%, but chairman Richard Hyman cautioned: 'It's easy to think that because the volume of sales are up, profits will be up by the same amount. Sadly that doesn't follow. There is still a huge amount of price pressure and virtually no retail inflation, so margins are very low.'