Credit cards show sales slump

AFTER a disappointing Christmas, High Street stores may be on course for their worst January sales for 25 years. Although John Lewis has reported upbeat revenues in the first three days of its discount sales, statistics from the credit card industry have cast a shadow over the retail sector.

The British Retail Consortium is expected to report that shops experienced, on average, a 2% fall in like-for-like sales in December compared with 2003. Many were counting on a post-Christmas spending spree to boost their sales. But, according to MasterCard and Maestro, the credit and debit card company which accounts for a quarter of all retail transactions, many shoppers stayed away.

On Boxing Day, retail sales on its cards totalled £36m, down 1.6% on 2003. On December 27, they were 5% lower than the previous year at £97m. MasterCard Europe chief executive Paul Lucraft said: 'Consumers appear to have been cautious in the run-up to Christmas and the restraint continued once Christmas Day was over.'

The first detailed evidence of how Christmas has gone should come from fashion chain Next later this week ? though preliminary indications from Woolworths do not look good. Next is understood to have had a torrid Christmas and analysts have suggested that the best the chain could hope for was a 'solid' and 'acceptable' performance. Other retailer have had a far more difficult time, with serious questions raised about Marks & Spencer, House of Fraser, Allders, JJB Sports, WH Smith, Dixons, Boots, Clinton Cards, French Connection and Benetton.

The big winners, meanwhile, appear to have been the supermarkets, despite fears that they could be hit by long queues as a result of the introduction of new chip and Pin technology.

These early fears appear to have been unfounded ? analysts had worried that people might not have been able to make purchases by card unless they had a new credit or debit card that can be authorised with a four-digit Personal Identification Number (PIN) rather than a signature. In fact, in most cases people can continue to use their signature. However, new checking procedures to ensure cards are not stolen will slow the process of paying.

Business and IT analysts PA Consulting Group claim that chip and Pin will 'have an initially detrimental impact on retailers'. It said it was realistic to expect the average queuing time for a supermarket to increase by 59% ? up from just under five minutes to nearly eight minutes.