January Sale past its sell-by date

THERE was a time when no Boxing Day TV news bulletin would be complete without pictures of plucky bargain-hunters bedding down for the night outside Selfridges or Harrods, determined to be first through the doors the following day.

Back then, the January Sale was a British institution - and certainly not for the faint-hearted. Stores were mobbed by people desperate for the heavily discounted toys, clothes and TVs that Christmas shoppers had paid full price for a few days earlier.

These days, however, the January Sale holds nowhere near the same fascination. Having successfully left the festive spending later and later each year, the canny British shopper has been rewarded with bargains galore in the run-up to 25 December, which included unprecedented one-day 20%-off spectaculars at Marks & Spencer.

All are aimed at getting shoppers to spend, and the scale and frequency of such price promotions reflects the panic among retailers as the now-traditional game of cat-and-mouse is played out.

In many cases it has succeeded in getting people through the doors, but at what cost to margins? Any retailer can sell just about anything if the price is low enough, but at M&S for example, sales are thought to have slumped the day after both its one-day sales.

Promotions bought forward from January to December are not necessarily a disaster if margins can be maintained across the overall period. For example, Debenhams has been attempting to boost higher-margin December sales by offering £10 off in the (far-lower margin) January sale for every £30 spent before Christmas.

Gerry Murphy, chief executive of B&Q retailer Kingfisher, believes the City is too caught up on pre-Christmas trading: 'We know that customers are much more value conscious than they have ever been and they have learned to shop later. The post-Christmas clearance should be seen as part of a package with Christmas. Only in mid-January will the true picture emerge.'

But the picture is already pretty clear at struggling sports chain JJB. Rather than just launching a 'flash' promotion, it brought its entire January sale forward to mid-December. Fashion retailer Hobbs hoisted the 'Sale' signs as early as last week, followed by Gap, H&M and Benneton. Sales are also on at Karen Millen and Laura Ashley, while M&S is offering selected reductions of up to 50%.

At JJB, the move appears to have done little to boost business. 'From our store visits over the weekend there still seems to be plenty of stock to shift,' says retail analyst Iain McDonald at Numis. He is cutting his 2005 forecast for the group from £71.6m to £65m.

Fashion retailer Next Group, one of the High Street winners last year, has traditionally remained firm in the face of pre-Christmas price-cutting and is one of the few retailers whose sale still excites bargain-hunters.

But, if Seymour Pierce analyst Richard Ratner is right, it may create even more of a stir this year as the group deepens its discounts to make up for a dismal December. The past four weeks have been 'very tricky' for Next, says Ratner, and its margins may have to take a far bigger hit if stocks are to be cleared next month.