Price cuts and special offers are likely to continue throughout what is expected to be a difficult 2009, the British Retail Consortium has said.
Although the post-Christmas sales attracted thousands of bargain-hunters, many queuing for hours before shops opened, the consortium said the majority of shoppers are spending cautiously.
Rising unemployment, falling house prices and economic gloom were said to have curtailed festive spending which is expected to be lower than Christmas 2007 when figures are released next month.
Consortium spokesman Richard Dodd said: “There’s no indication that fundamentals are going to change so customers will go on being reluctant to spend and retailers will have to go on offering big discounts and promotions in order to tempt them in, which is very difficult for retailers.
“They have to be able to make an acceptable margin on what they sell in order to be able to cover their costs.”
Shoppers’ reluctance to spend in early December sparked a rash of special offers but sales on Boxing Day and yesterday had lost none of their allure with queues of up to 1,000 people outside some Next stores and people waiting nine hours to be first inside Harrods.
Mr Dodd said: “There is no question that large numbers of shoppers turned out over the last two days. Boxing Day was certainly the biggest retail Boxing Day that we have seen as more stores offered more discounts and bigger sales than they have in previous years.
“The beginning of more sales from more major retailers yesterday brought even bigger crowds out.
“The key question though is how much people are actually spending. They are being very cautious.
“Generally speaking, retailers have had to do an enormous amount to tempt people in.”
Mr Dodd said the good sales turnout and “a last-minute surge” before Christmas were unlikely to have compensated for the “long, difficult build-up”.
“It’s unlikely that the total value of sales will reach last year’s.”
The comments follow a survey by Lloyds TSB that found that almost nine out 10 rated job prospects worse than 12 months ago but many expected the price of goods to fall in 2009.
More than half of those questioned predicted that prices in general will fall or be the same in 2009 and most expected the rate of inflation to be lower in a year’s time.
Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said: “The aggressive pre-Christmas discounting on the high street has encouraged consumers to set their price expectations low for the year ahead.
“This is a dramatic turn of events from the summer, when petrol prices were at their peak and the majority of consumers felt prices would continue to rise.
“But low price expectations do not necessarily mean consumers will increase spending in 2009. The expectation that interest rates are set to rise may mean that consumers don’t have the confidence to spend, preferring to save for the years ahead instead.”