Who will be the High Street losers?

YOU could say that it never rains but it pours on the High Street. Two weeks ago Debenhams joined Peacocks and New Look in blaming wet weather for slowing sales growth.

Days later shares in Woolworths hit new lows after an analyst's note said that the pick 'n' mix retailer's CDs, clothing and garden equipment sales had also been hit by the summer washout. Then Next slashed prices of clothes by up to 50% in its summer sale to clear a big build-up of stock.

Confirmation of the slowdown came with the news that retail sales were growing at their weakest rate for 18 months. Alastair Eperon, chairman of the CBI's trade survey panel, said: 'The retail sales boom seems to be over. Despite continuing price cuts and stiff competition on the High Street, consumers are less willing to spend.'

But with credit easy to get and jobs plentiful, will boom inevitably lead to bust? And who will be the winners and losers?

Bill Moyes, director-general of the British Retail Consortium, said that talk of a huge retail slowdown had been exaggerated. 'It is by no means a disaster,' he said. 'We are still seeing growth of between two and four% in the sector. That would have been seen as fantastic in 2000.'

However, he admitted that consumers were less willing to spend. 'Customers are worried about their retirement income, particularly as they see the stock market going south. Our concern is that they will save more and spend less,' he said. 'This will mean that tight profit margins will be squeezed even further and businesses that are already feeling the weight of Governmentimposed charges, such as National Insurance increases and the minimum wage, will be unable to pass these costs on to their customers.'

In the clothing sector, rival retailers are nervously monitoring a revitalised Marks & Spencer, which seems to have regained its poise after a torrid few years. Next is likely to be one of the main sufferers, according to investment bank Credit Lyonnais, which has warned its clients that the retailer is overvalued.

Analyst Kien Tan said: 'The competition is getting harder for Next. Sales have slowed dramatically and other retailers are very similar - M&S has ''grown-up Next'' with George Davies's Per Una, Debenhams has ''mumsy Next'' and Asda has ''cheap Next''. It is operating in a tough market.'

In the food sector, there is pressure on margins. Andrew Kasoulis, analyst at investment bank Credit Suisse First Boston, said: 'We have been forecasting slowing sales growth for a year now. Times are tougher, the poor weather has had an impact on pricing and food retailers have become more price-sensitive.'

Analysts agree that there will not be a 'bloodbath' on the High Street, but predict that the end of the spending boom will be marked by winners and losers.

Tan said: 'The also-rans are going to be left behind. And it is not just the smaller outfits, but those such as Woolworths, which has attracted negative comments recently, House of Fraser, Allders, Big Food Group and Somerfield. They are in for a very tough time. The news will be better for food retailers such as Tesco and Asda, with their good non-food lines, and discounter Matalan, whose growth will continue. Those who succeed will be the retailers who understand their customers.'

CSFB's Kasoulis agrees: 'Last year in food, everyone was a winner. Now there will be losers. Tesco will win over Sainsbury's because it offers better value. It is more responsive to customers' needs. But Woolies is in for a rough ride - it will be the net loser from this. Any non-food specialist without a focus on value will struggle. The trend is towards strong food retailers.'