Hazel Mollison: Bargain hunt back on as confidence grows

Published on Monday 30 November 2009 08:53

AS PRINCES Street reopens, there's no doubt the countdown to the festive season is well under way. With the big day approaching, it's getting harder and harder to avoid the sparkling trees, Christmas carols and department store Santas on any trip into the city centre.

But one common sight from last year appears to be missing. Shop windows are no longer draped with massive sales posters, and the attention-grabbing "50 per cent off!!!" signs are thin on the ground.

In fact, a survey by Price Waterhouse Coopers has found that less than half of high street retailers are advertising promotions, compared with 63 per cent last year. When there are discounts, they tend to be lower than previous years, at 25 per cent rather than 40 per cent off.

After last year's dismal festive season, it seems that retailers are cautiously optimistic. Sales are rising slowly, inflation is low, and shoppers have regained some of their confidence.

As a result, retailers are holding back on starting their sales in the hope that consumers will be tempted to shop early. The rise in VAT, due on 1 January, could also give them a pre-Christmas boost.

This could prove to be a risky strategy. The recession is still looming over us. Christmas can be a make or break time for retailers, and if customers appear to be keeping a tight hold on their purse strings, they may still be tempted to start discounting over the next few weeks.

Jason McBurnie, of PwC's corporate finance team in Scotland, said: "It is going to be a rollercoaster ride for retailers during the festive period, which is traditionally the most important time of their business year.

"With retailers better prepared for Christmas this year, and with lower stock levels, it is clear that they have been honing their strategies to drive footfall and sales – focusing on brand and experience and, so far, less on price.

"The jury is still out on whether retailers are going to be able to continue to be brave over the weeks ahead, and already we're seeing a return of the 'spectacular' style promotional events of last year.

"One thing is certain – retailers are watching their daily sales figures like a hawk, and if consumers are not being tempted to spend, then we can expect a surge in discounting activity."

While it may be a rollercoaster season for nervous retailers, at the moment the picture on the high street is looking a good deal brighter than this time last year.

John Lewis's Edinburgh store reported a 3.7 per cent rise in sales for the week ending 21 November, compared with the same period in 2008. DSG International, the owner of Currys and PC World, has reported its first prolonged period of sales growth in more than two years, and a survey by the Confederation of British Industry has found that most companies saw a rise in sales in November.

A balance of 19 per cent of retailers are expecting sales volumes to increase in December. Retailers of items related to the housing market, such as furniture and durable household goods, have seen sales volumes rise for the second month as house prices stabilised.

For Princes Street stores, the reopening following the tram work is expected to give them a major boost. The city council also introduced its seasonal free parking – on weekday evenings and Saturday afternoons – last week.

George Bell, manager of Jenners, said: "We're hoping to see a big increase in footfall. I think it will make a big difference, and it's just what we need in time for the festive season."

While there may be fewer pre-Christmas sales, canny shoppers can still find bargains. Most stores are taking a more targeted approach and offering reductions on particular ranges. For example, Boots is offering three for two on all toys, while Debenhams is running a sale on coats and knitwear.

Another growing trend is short sales, sometimes lasting just 24 hours. Richard Dodd, of the Scottish Retail Consortium, said that despite the lack of major pre-Christmas sales, it was still a good time to be a consumer.

He said: "Across the board, shop prices are no higher than they were a year ago. Figures for October show that overall price inflation this year was actually zero, and the price of non-food goods is down. A lot of products, such as homeware and electrical goods, are actually cheaper.

"There's definitely a sense that customers are a bit more sure about their own situation. Things were really very difficult indeed 12 months ago. We had a banking crisis, and we were heading into a deeper recession. Retailers were going to the wall every other day. That was undermining customers' confidence. We're not out of the woods yet, but a lot of customers are feeling more positive than last year."