Sales war on the High Street

DESPERATE stores have resorted to full- blown 'panic' sales as their Christmas trading crisis deepened. With shoppers spending £400m less this year on presents, some High Street chains slashed prices by up to half in a frenzied attempt to get goods moving.

One analyst said launching sales eight days before Christmas, when traditionally the tills should be overflowing, is 'a real sign of distress' among retailers.

Fashion chain Benetton - which also owns Sisley stores - womenswear retailer Whistles and JJB Sports were among those making 50% reductions. Discount clothes giant Matalan cut 25% off all gifts, while electrical store groups such as Dixons radically marked down goods.

The drastic price-cutting is a significant step up from the one-day 'guerilla sales' held recently by Marks & Spencer, Debenhams, House of Fraser, Woolworths and WH Smith. John Lewis, a key indicator of how the High Street is faring, revealed that the store chain's sales for last week were 0.6% below the same time last year.

Richard Perks, a retail analyst at Mintel, suggested many chains, particularly clothing stores, have masses of stock which they are finding difficult to shift. This is because they placed their orders for winter and Christmas merchandise in the spring, when confidence about retail spending was high.

A survey by Switch-Maestro suggests Britons will be shelling out £400m less on presents this Christmas than a year ago. It calculates that average spending per adult on Christmas 2004 will be £813 - down £55 on 2003 and the lowest figure since 2001.

Perks said a decision by stores to launch full sales before Christmas is 'a real sign of distress'. He added: 'There is no doubt that this is going to be a tough Christmas. Going on sale before Christmas is such an admission of defeat.'

He said five interest rate rises in the past year have squeezed family budgets, while falling house prices have been a blow to consumer confidence. But the price-cutting frenzy is a Christmas bonus for High Street bargain-hunters.

Debenhams is running a 20% off gift sale which continues today. It is boasting of big savings on toys and games, plus 20% off 'designer gift food'. For example, a gift pack of Laurent-Perrier champagne and Jasper Conran chocolates is down from £30 to £24.

Allders has been running Christmas 'spectaculars', promising up to 50% off, for the last three weeks. Its latest bargain promotion has been extended until tomorrow evening.

There is continuing speculation that Marks & Spencer will hold a third 20% off sale day over the next week. The stores group is already offering up to 50% off women's 'occasion wear' among a number of price cuts.

Argos, Dixons, Currys and Comet are also fighting a gift price war as they face stiff competition from the major supermarkets and DIY warehouses on electrical goods. Currys has cut an Hitachi micro hi-fi system by half to £74.99 and halved an Hitachi blender to £29.99. Argos has 20% off all Philips shavers, while a Kenwood coffee maker is half price at £49.99.

Boots and Superdrug, which are also being challenged by the supermarkets on cheap fragrances and beauty products, have cut prices. Woolworths and WH Smith have many items at 50% off.

The British Retail Consortium and the CBI had already warned of a tough Christmas for stores. But the 'guerilla sales' and price cuts by Marks & Spencer and others boosted High Street trade in November, according to official figures published.

The Office for National Statistics said retail sales grew by 0.6% compared to October. Retail volumes were 6.1% higher than November last year, while the total value of sales rose by 4.2% to an estimated £21.1bn.

The fact that the value of sales rose by less than the volume is a pointer to heavy price-cutting. The ONS said November was a tough month for large toy outlets and sports retailers - which may explain JJB Sports's aggressive sales tactics.

Its half-price deals include Nike Impax Junior trainers at £19.99, a TaylorMade R58OXD golf driver at £149 and a Magna Kick 360 BMX bike at £89.99.

Benetton confirmed that a winter sale has been launched in the ten UK stores it runs directly. Similar cut-price deals are also available in its other 90 franchise outlets.

Price cuts of 50% bring down the cost of a dogtooth coat to £90, a taupe and brown woven wool coat to £67.50 and an evening silk and wool top in black to £18.50.