January blues a test for the High Street

FOR THE one thousand manufacturers who filled out the CBI industrial trends survey, the past few weeks have been truly awful. For Sainsbury's, the past few weeks have been fantastic. It would be easy to use these two facts as graphic evidence of the two-speed economy. Easy, but misguided.

Debenhams, one of the retail industry's recent success stories, admitted on Tuesday that sales had slumped in October. The decline could be blamed on the mild autumn weather, falling consumer confidence or both. Whatever the cause, Debenhams is not alone in feeling its effects. Most non-food retailers have seen a downturn in sales this month, after a surprisingly good September.

The terrorist attacks on New York and Washington last month, the war in Afghanistan and the ongoing fear of terrorist reprisals have engendered a mood of greater caution in Britain, especially in London. But the situation has made people less likely to go abroad and more likely to spend money here, particularly on food perhaps.

Anecdotal evidence suggests there may also be an increased interest in Christmas. People are apparently planning to combat the external uncertainty by celebrating Christmas even more than usual with a more than usual focus on the family.

Retailers spend all year preparing for Christmas in the hope that the festive season will provide a massive boost to sales and profits. This year, they are probably pinning their hopes on Santa even more than usual. The psychology makes sense but it does not, unfortunately, deal with the January blues.

Next year could be a testing time for the High Street. Most stores groups privately admit that they expect demand to slacken in the New Year even as they take on board the extra space they bought when conditions were better. Sainsbury's has turned in a better than expected performance over the past few months but this reflects recovery work and heavy investment by the new management.

Fundamentally, the supermarkets sector is over-supplied for its long-term good. The two-speed economy has been bamboozling think-tanks, politicians and economists for years. The fast-track retail element within it may now be starting to slow down.

Table talk

WHEN investment banks pitch for new business with clients, one of their key selling points is past success. To illustrate this, they make ample use of league tables. These are designed to show how clever banks have been in the past and how many other clients have trusted them. The higher up a table a bank appears, the more impressive it will look, so conventional thinking goes.

League tables are always important but when business is scarce - like now - they take on a significance verging on desperation. Banks employ staff specifically to construct league tables for new business presentations. This is not as simple as it seems. Employees who have been engaged in the task describe it as quite an art form, involving the delicate manipulation of material to engender the necessary result.

For companies pondering which investment bank to choose for forthcoming work, the consequences can be quite confusing. They can find themselves presented with four different league tables on the same topic, each showing the presenting bank in the best light.

No wonder big companies frequently employ boutique advisory firms to provide independent counsel on the big investment houses.