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Will Christmas rescue the High Street?

WITH people ladened with bags bustling around one of Scotland's busiest shopping streets, it certainly looks like the festive spending spree is under way.

Everything from toys and handbags to televisions and iPads is being snapped up, according to Kim Lowe, managing director of John Lewis in Glasgow's Buchanan Galleries. But is it all as good as it seems?

"It isn't all doom and gloom," Lowe says. But she confesses: "It is difficult in certain areas – customers are being careful, but they are still up for a good Christmas. They are not skimping on treats and they are not skimping on the children."

Lowe even claims business at the store during November and December to date is ahead of last year.

"Our toys, which were struggling in the year, are flying out now," she adds. "We've taken on more staff than last year, bought more stock than last year. In tough times, people tend not to skimp at Christmas."

But many retailers' nerves are jangling in the run up to Christmas in the midst of troubled economic times. With some stores slashing prices by as much as up to 70% in a bid to entice customers through the door, it can appear more like the desperation of the January sales than the expectation of a lucrative Christmas bonanza.

Last year, extreme wintry conditions left many stores counting the cost of lost trade. Last Thursday, shops were deserted as Scotland was battered by a massive storm.

With retailers hoping the weather will not wreak any more havoc, a bigger question is whether shoppers will be prepared to put their economic woes aside and splash out amid rising unemployment and a dearth of consumer confidence.

Fresh signs of the struggle on the high street emerged last week. On Wednesday, Blacks Leisure, the outdoor goods chain with Scottish roots, put itself up for sale. On Thursday it was announced the owner of shoe shops Barratts and Priceless Shoes had collapsed into administration, placing nearly 4000 jobs across the UK at risk.

On the same day, the UK's biggest supermarket Tesco reported falling sales for the fourth quarter in a row despite a £500 million price-cutting campaign. Chief executive Philip Clarke acknowledged "times were tough" for a number of customers.

Professor Leigh Sparks of the Institute for Retail Studies at Stirling University said the indications were that retailing was "pretty depressed" as a sector.

"Retailers are obviously hoping people will decide they have had a bit too much doom and gloom and try and have some excitement over Christmas," he said. "But clearly consumers are conserving their money as well, so it is a very much a game of cat and mouse.

"I think consumers will be looking to get the best bargains they possibly can and retailers will be hoping it will be them they actually do the purchasing with."

Sparks said the "very tough trading" was likely to continue into the first three months of the year.

He said: "The January to March period is always a difficult period for retailers post-Christmas, post-New Year. Consumers are cutting down their spending, retailers were struggling anyhow, I think we may well see more failures going on."

But he added: "On Saturday you go into the centre of Glasgow, stand at the Royal Concert Hall and see a sea of heads as you look down the street," he said. "The question is going to be what are they spending on and how much?"

Back in Buchanan Galleries, there are signs shoppers are still prepared to splash out. Yvonne McMillan, manager of fashion store Fred Perry, has noticed a slight drop off in customers, but says sales are up by 10% on last year.

"The footfall is down about 8% on last year," she says. "We have fewerpeople, but they are buying more."

On Wednesday more indications of how the retail sector north of the Border is faring will be revealed with the publication of statistics on November sales from the Scottish Retail Consortium (SRC). In October, total sales were down 0.1% on the same month last year. Like-for-like figures – which exclude the effect of new stores opening – dropped by 1.5%.

Richard Dodd, spokesman for the SRC, said there was a "strong possibility" the figures would show sales dropped during November.

He cautioned that last year's difficulties when poor weather hampered people from getting to the shops, may be replaced this year by reluctance among consumers to splash out.

He said: "Obviously it is very worrying. Christmas is tremendously important to most retailers and even more so after such a difficult year.

"If shopping from a practical point of view is easier (this year) you would expect people to be able to go out and do more shopping and therefore be able to spend more.

"But, of course, it is all about the balance between practical difficulties from last year compared with economic difficulties this year."

He added: "I think it is clear that people's concerns about their own finances and job prospects and the wider economy are a lot more severe than they were this time last year."

One question puzzling retailers is how much of a last-minute rush will be seen on Christmas Eve, which falls on a Saturday.

Dodd added: "A lot of people will be really determined to put their worries to one side if they possibly can and to go out to buy the things they need and want for Christmas to make sure they have a good time, but there is no question people are leaving it very late this year.

"Retailers will be very much hoping that boost does finally materialise, even if it is pretty last minute. Then the real concern will be the extent to which people then clamp down even further once we get into the New Year."

It is not just a lack of consumer confidence the high street is facing, but the growing trend of shoppers turning to the web.

Last Monday – dubbed Cyber Monday as the busiest online shopping day of the year – £19 million was spent every hour over the internet in the UK.

Duncan Furness, Waterstone's regional manager for north and west Scotland, said the company was addressing the threat by focusing on connecting with local customers and returning to a more "traditional" bookseller model – providing a more personalised service .

"We don't want to be a showroom for Amazon," he said. "We have a really good Scottish section in our branches, for example.

"By pulling people in and showing them a huge range, we will tempt people to buy."

Professor Joshua Bamfield, director of the Centre for Retail Research in Nottingham, said smaller retailers which have up to three shops could be particularly at risk in the current climate because they cannot compete with price cutting by major chains and often do not have an online presence.

A recent survey of around 200 independent retailers across the UK, carried out by the British Independent Association Retailers Association (Bira), found that nearly half said sales were down on last year and 30% said they were flat.

Michael Weedon, deputy chief executive of Bira, said: "Christmas has not come early for retailers and people are buying where there are sales – if they are buying.

"However if you look at the figures (from the survey), 25% of retailers also said business is better than it was."

Weedon also pointed out that the retail gloom was not deterring new shops from opening. "There is a surprising story, which is you can't stop people opening shops."

Independent book store Young's Interesting Books opened two years ago in Shawlands. Co-owner Noelle Carroll said she had noticed a drop in trade in the run-up to this festive season.

"It's only now really coming into its stride," she says. But she believes shoppers are still attracted to the store in search of presents with a difference. "They just want something a little bit unusual," she adds.

A few streets away is independent boutique shop Pierrot et Coco, which was opened by Morven Landi and her husband Piero a year ago. She says it has been busier in the past few weeks and believes their policy of offering unusual gifts had helped to make it a success.

"You do have your moments of thinking if it's a recession, people might not spend as much – but we are not going to worry."

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