Retailers slash prices over fears for worst Christmas in 25 years

Big names including House of Fraser, Debenhams, W H Smith, Argos and HMV have all announced discounts, timed sales and special offers in an earlier than usual bid to woo customers.

Industry analysts are predicting a rash of further 'aggressive' price cuts in the run up to December 25 as leading chains battle to shift stock.

Natasha Burton of retail analysts Footfall said: "The next four full weeks of shopping activity is likely to be a nervous time for retailers and we are expecting to see an abundance of aggressive marketing and discounting campaigns."

The price slashing comes as Footfall has identified the sharp drop in shopper numbers compared to a year ago.

One other analyst has suggested high street stores face their worst Christmas, in terms of a decline in annual sales, for 25 years.

And a report to be published by the British Retail Consortium next week is expected to confirm a disaster for high street stores in the early weeks of the festive shopping period.

The so-called 'guerilla' or timed sales, where unannounced large discounts are available for as little as a day, have been pioneered in particular by Debenhams and WH Smith.

Debenhams is offering 10 per cent off everything between Nov 30 and Dec 3, while WH Smith has run a number of sale days promising 'an extra 10 per cent off everything'.

Experts say these are an attempt to pre-empt the shoppers' tendency to wait as long as possible before buying Christmas presents in case there are extra discounts.

Because Christmas Day falls on a Monday this year, people may otherwise wait even longer before buying because psychologically they feel they have more time.

Earlier this week, House of Fraser was offering up to 25 per cent off many gift items in a special sale day. Dorothy Perkins had a special '20 per cent off everything' sale. Both will be repeated.

Argos is offering a range of half-price deals on digital cameras and kitchen equipment, for example a Russell Hobbs toaster and grill set is down to £29.99.

Virgin is offering bundles including computer game consoles and games with savings of up to 20 per cent. Woolworths is throwing in free games with some consoles.

HMV is offering big savings on DVD box sets. For example 'The Audrey Hepburn Collection' is down from £49.99 to £14.99 - a saving of 70 per cent.

Footfall says the number of people out shopping last weekend was down by 15.1 per cent on the same time last year.

Shopper numbers for the week ending last Sunday were down by 9.1per cent on a year ago.

Miss Burton said: "Week after week the levels remain considerably down when compared to last year.

"In order to start catching up with the 2005 Christmas period, footfall levels need to start rising much more steeply."

Many families have been hit by higher interest rates and household bills, particularly for gas and electricity, leaving them with less spare cash.

"Wary consumers are waiting until they feel more sure of their final budgets before making the bulk of their festive purchases," said Miss Burton. She is predicting a last minute rush in the final two weeks of the month.

Retail analyst, Richard Ratner, of Seymour Pearce, said anecdotal evidence about trading in the last week of October and the first three weeks of November had set alarm bells ringing.

He said: "We now believe that Christmas in 2006 will be worse than 2005, and could be as difficult as, or even softer than, 2004, which was the worst Christmas for 23 years.

"If the latter is the case, it will make it the worst for 25 years."

A CBI study published earlier this week found 34 per cent of retailers reported a decline in early November compared to a year ago, while 25 per cent sales were up.

This is the second month in a row where negative reports outweighed the positive.

Executive director of Asda and chairman of the CBI's retail panel, John Longworth, described the findings as 'clearly disappointing'.

However, he said: "Retailers are still looking forward to healthy sales growth during the busy Christmas period and are placing more orders with their suppliers.

"We can only hope this forward planning makes the tills ring louder in December. After two months of disappointment, retailers badly need the seasonal boost that Christmas usually brings."

One of the few stores apparently bucking the trend is John Lewis. It sales for period of Sunday to Wednesday this week were up around seven per cent on a year ago. It is selling two TV sets, virtually all flat-panel, every minute, Laptops are selling at one every two minutes.

Top Christmas bargains include:

• Argos: half-price deals on digital cameras and kitchen equipment eg Russell Hobbs toaster and grill set £29.99.

• Currys: 'up to half price' sale on MP3 players as well as substantial savings on iPods. Half-price Ferguson DAB radio for £49.99.

• Debenhams: currently running a '10 per cent off everything' sale which began on Thursday and ends Sunday.

• House of Fraser: up to 25 per cent off many gift items on special sale days.

• Dorothy Perkins: '20 per cent off everything' sale says.

• WH Smith: 'an extra 10 per cent off everything' sale days.

• Homebase: '10 per cent off everything days' eg Philips 7in portable DVD player down to £89.99.

• Virgin: bundles including computer game consoles and games with savings of up to 20 per cent.

• HMV: big savings on DVD box sets eg 'The Audrey Hepburn Collection' down from £49.99 to £14.99.

• H.Samuel: substantial savings on watches eg a man's Wave Ceptor watch is £10 off at £29.99.