With inflation up and wages frozen, retailers pay the price of consumer insecurity

But even though more than 90 per cent of the 800,000sq ft centre on Argyle Street is let, Nicol is clearly anxious about what the next six to 12 months holds for the high street and shopping centres such as her own. Last month, she lost two tenants in the space of just 48 hours as clothing retailers Fenchurch and Henleys both went to the wall.

Question marks are still hanging over whether JJB's 20,000sq ft store at St Enoch will be among those retained by the troubled sports fashion chain, which has been forced into a company voluntary arrangement to secure its survival.

Nicol insists that the number of shoppers passing through St Enoch's doors is still on the rise, with footfall 20-30 per cent up every month this year on the corresponding period in 2010. But she admits that shoppers are no longer prepared to part with large chunks of their savings, and bargain-hunting has once again become prevalent as households return to strict budgets.

"People are still coming in, and they are still shopping, but customers are definitely looking for better value and sales and discounts - that is what they are searching out," says Nicol. "There is a great deal of uncertainty out there."

The last retail slump, which took hold at the end of 2008, was described at the time as a crisis of confidence among consumers, who were shocked into something of a paralysis amid the unfolding economic turmoil. But while the recession has been and gone, and the banks that were at the heart of the unprecedented financial crisis are now well on the road to recovery, consumers are once again up against it.

This time around, households are facing a real squeeze on their disposable income as inflation, higher VAT, unemployment and two years of wage freezes take their toll. The money just simply isn't there to spend, according to Vicky Redwood, senior UK economist with Capital Economics.

"Households are now bearing the brunt of the economic fallout and the recovery period is going to be pretty sluggish," she says.

Official statistics and financial updates from individual companies both paint a mixed picture of the situation unfolding on Britain's high streets. While a handful of predominantly lower end retailers are faring well - Sports Direct and Farmfoods are among those that have recently unveiled strong results - most are, at best, treading water against the ebb tide of consumer spending.

The City is keeping a keen eye on All Saints after it emerged that one major investor walked away from rescue talks. Rumours have been circulating that the fashion chain is on the brink of administration despite protestations by its boss, Stephen Craig, that he can strike a rescue deal within weeks.

Even the mighty Tesco has not been immune to weak spending in its home market. The UK's biggest retailer unveiled record year-end profits last week, but more than two-thirds of this growth came from continental Europe and Asia. In the UK, where Tesco generates 68 per cent of its trading profit, total like-for-like sales were flat, following a dip of 0.7 per cent in the final quarter.

New boss Phil Clarke, successor to Sir Terry Leahy, admitted the UK performance was "below par" but refused to lay all of the blame on weak consumer spending. "Our clothing was not quite right, our general merchandise, electricals and home goods were a bit samey," he said.

Despite Clarke's honourable confession about the weakness of some of Tesco's merchandise, analysts insist there is little doubt that the squeeze on real pay is putting pressure on spending across the board.

Most were shocked when the Office for National Statistics (ONS) revealed a 0.9 per cent fall in UK sales during February, and though there was a surprise 0.2 per cent pick-up last month, the picture is hardly rosy. The overall rise in March included a 0.3 per cent dip in spending on items other than food, which is the area most affected by the disposable income in shoppers' pockets.

Analysts say there's no getting away from the fact that consumers are reluctant to spend on anything they don't have to.

"Tesco's non-food sales have really tailed off in the last 12 months, which is a very interesting indicator," says Matt Piner, senior retail analyst at Verdict Research. "People are still going to Tesco if they need something, but there are not so many impulse purchases going into their baskets."

The rising cost of fuel and electricity has played a major part in eroding discretionary income, as have government increases in VAT.

KPMG's David McCorquodale expects no significant upturn in spending this year, as families have slipped into lower spending patterns since the end of the winter holidays.

"This decline probably would have happened around November or December of last year, but of course we always have this boost around Christmas," says McCorquodale, who works with the Scottish Retail Consortium (SRC) to produce monthly figures.

Last week, the SRC unveiled the first monthly fall in total sales in Scotland since records began 12 years ago. That followed comparable figures from the British Retail Consortium earlier this month, which recorded a 1.9 per cent decline for the whole of the UK.

The discrepancy between the BRC's figures for March and the more upbeat reading from the ONS is in part due to the fact that government statistics adjust for seasonal impacts such as the later Easter holidays this year.

McCorquodale says this weekend's celebrations, the forthcoming Royal Wedding and sunnier weather could combine to give retailers a bit of a temporary reprieve, but real recovery will only come when the majority of consumers feel secure in their jobs and incomes.

He predicts that retailers at the upper and lower ends of the market will cope best, a trend that Kantar Worldpanel's Ed Garner says is already emerging in the supermarket sector.

"It is a story of two nations, because for some people it means turning to the discounters - the Aldis and Lidls and so forth - and for others it means a bigger emphasis on Waitrose and Tesco's Finest range," he says.

The discounters appear to be benefiting from those who do "mixed shopping" - splitting their weekly food spend between budget and mainstream supermarkets. Analysts say the discounters are now getting a much bigger share of mixed shoppers' money.

This pattern is being repeated to some degree in fashion and homewares, with shoppers willing to splash out on certain designer brands but equally happy to turn to the likes of Primark or TK Maxx for the staples. This would put middle-market retailers under the most pressure, according to the City, while specialists in electricals, soft furnishings, DIY and other big-ticket items are already feeling the squeeze.

Verdict's Piner says it could take until 2013-14 before things begin to seriously pick up, with any improvements in next year's figure likely to be more of a statistical "catching up" as the impact of VAT increases and rising energy and material costs are worked out of comparisons.

With growth in internet sales also beginning to slow, Piner warns that retailers can no longer "complacently ride that rising wave".

"Up until now, online has been an easy win," he says. "Because that market is beginning to mature, now it is going to be more about how you get existing shoppers to spend more."