Big stores enjoy boom week after months of retail gloom, but Scots consumers are still being canny.
By Helen McArdle

DISCOUNT initiatives launched by high street and department stores last week have finally "kick-started" Christmas shopping and given a much-needed boost to beleaguered retailers.

Gary Slattery, manager of Glasgow's House of Fraser, told the Sunday Herald he attributed a 27% boost in the store's year-on-year sales on Thursday to the extra customers lured into the city centre by hype surrounding the M&S one-day sale on Thursday and Debenhams' three-day event, which began on Wednesday.

"It demonstrates that all the advertising M&S and Debenhams have been doing for their events drove a lot of customers into Glasgow and a lot of other retailers have benefited on the back of that," said Slattery.

"Consumers have been thinking hold on', and finally retailers have said right, we'll give you what you want'. I think the action they've taken has kick-started Christmas shopping, and gotten people into a Christmas shopping mentality."

Despite the gloomy economic outlook, Frasers' own offer of a 20% discount for its 65,000 store card holders for the five weeks until December 12 has already seen a 56% increase in handbag sales and a 30% boost for menswear, compared with 2007. Trade at the Glasgow branch has even outstripped London's Oxford Street to top the chain's UK sales table.

In what appeared to signal the start of a Christmas price war yesterday, John Lewis unveiled a range of discounts after Debenhams extended its sale over the weekend. Both department stores are offering 10% discounts on premium beauty and fragrance lines, and up to 20% off designer watches and selected clothing brands. On Thursday, the high street bellwether reported a 14% drop in UK sales after one of the worst trading weeks in its recent history.

However, Linda Rodgers, at the Glasgow store, was keen to stress that price-matching conformed to the company's "never knowingly undersold" policy and it did not class the move as a "sale". She said: "John Lewis always look to the longer term, and we feel we are quite well-placed to take up Christmas sales and maintain market share. The indications are that customers are now starting to buy for Christmas."

According to Fiona Moriarty, director of the Scottish Retail Consortium, bargain-hunters were also out in force in Edinburgh yesterday in what could be a "encouraging" trend.

"The current discounting is reflecting some nervousness on the high street because consumer confidence has been relatively low for most of this year and retailers are doing what they can to encourage shoppers into their store. The flipside is that if it's been a difficult 12 months for retailers then it's a fantastic time to be a customer right now because there are some amazing bargains on the high street and I can only see that continuing in the run-up to Christmas."

Shopping in Jenners, she said: "I can't remember the last time I saw a Saturday in the lead-up to Christmas this busy in November. Hopefully a sign that things are going to get better."

A spokesman for Consumer Focus Scotland was more cautious, though. "While on the face of it this is good news for consumers, it is also a worrying time for retailers and their staff. It's not price alone influencing people's decisions to buy or not. It is also whether they think they should be spending at all, or keeping hold of their money because they don't know what is around the corner."

Quarterly surveys from CBI Scotland have shown falling retail sales and margins throughout 2008. Director Iain McMillan believes that widespread discounting will offer short-term relief to cash-strapped consumers, but is no cure for the troubled economy.

"They'll give customers a better deal but bearing in mind that during 2008, consumers have had to cope with higher food prices, higher petrol prices, electricity and gas prices going up - discretionary consumer expenditure has been squeezed. Cuts in retail prices by stores and others certainly give the consumers a better deal, but it won't put more money in their pockets."

He added that the increase in sales needed to offset price cuts and increase overall turnover- compared with last year - would be unlikely in the face of rising unemployment.

Ronald MacDonald, professor of political economy at Glasgow University, said the government's plans to prevent slowing inflation turning into deflation with tax cuts was the right move for retailers - though future generations of taxpayers will be forced to pick up the tab.

"I would say it is the right policy for them to pursue. They've overspent in the good times and their margin for increasing demand is not very good, which puts the burden on future generations in terms of having to pay higher taxes to pay off the debt, but that said, I think it is the right thing to be doing at the moment. That's the one thing I think would help prevent deflation."

Yesterday, a survey by financial experts Deloitte found 85% of Scots were ditching credit cards in favour of cash for their Christmas shopping to keep track of spending amid the economic crisis.

Deloitte retail partner Jim Boyle said: "The current loss of consumer confidence has resulted in a resurgence of the more traditional saving methods among some consumers. This could translate into a wider adoption of shopping saving schemes such as loyalty cards and Christmas clubs. This presents an opportunity for retailers to engage with their consumers and reward loyalty."