WITH the nation teetering on the brink of recession once more, retailers are bracing themselves for a difficult trading period.
The last recession cut deep and fast, leaving empty shop fronts as scars on high streets across the country – many of which are likely to take a very long time to recover.
And, this week’s figures from the CBI, which show the fastest rate of decline in high street sales for three years, will do little to allay the fears of many retailers that they could follow on the downhill path forged by Woolworths.
The CBI’s Distributive Trades Survey found that the decline in annual sales growth for November was minus 19.
Employment in the retail sector, which makes up 11% of the economy, also fell at the fastest rate since 2009, according to the report.
Sarah Green, the regional director of CBI North East, said: “The relatively mild weather this autumn has hit clothing stores particularly hard and retail sales are down year-on-year for the sixth month in a row.
“Retailers may be hoping that shoppers will loosen their purse strings in the run up to Christmas, but consumers are likely to remain cautious about spending given the uncertain economic outlook.”
But, despite the gloomy report, many retailers in the North East are still expecting a strong performance this festive period thanks to their ability to adapt to, rather than ignore, the new dynamic between consumers and traders.
For David Williams, who manages the Debenhams store in the relatively new quarter of Eldon Square shopping centre in Newcastle, this year has seen the company go to greater lengths to create a festive experience for its customers.
And the focus on increasing footfall, including hosting the first Santa’s Grotto in the store’s history, looks to have paid off.
“Trade will be much improved on last year from natural growth but also because in 2010 there was tough pre-Christmas weather.
“If we don’t have those conditions this year, we will see an even bigger lift across the store,” he says.
“We have a more local and tactical advertising campaign this year. For example we have advertised on the back of tickets in car parks, gone out and about on roadshows and run a free coffee campaign around the city.”
As one of the nation’s high street Goliaths, Debenhams may be in the fortunate position of having a mass advertising and marketing budget to play with this Christmas.
However, its recognition of the need to do more to appease increasingly cash-conscious customers has been mirrored by many other retailers.
And, although online shopping remains in the ascendancy, internet-based retailers are also facing up to the new world order in which the customer is king.
“We are having to give away a couple of free toys to customers who spend a certain amount, which we have never had to do before,” says Toys Direct manager James Parrish.
The Teesside firm, founded by James’ parents Brian and Linda in 1995, had a global customer base in excess of 250,000 at the last count. Trading is currently buoyant but, with around 50% of the company’s annual revenues being generated in the six weeks before Christmas, the ability to compete at this time of year is vital to its ongoing stability.
“This year should be better than last year, but it is still very competitive and we have to offer better deals to customers,” says Parrish.
“Last year the weather really affected us – not because we couldn’t fulfil orders, but because the press put people off from ordering online.
“When you had the Daily Mail telling its readers they wouldn’t get their orders by Christmas that really didn’t help us.”
Fortunately the online toy shop is enjoying better conditions than last year as sales of two of its core lines, Playmobil and Sylvanian Families, continue to boom.
While small, independent retailers may be dishing out freebies to boost their appeal, many larger retail players and shopping centres are focusing on enhancing the environment in which they operate.
At Eldon Square, major investments which have seen the centre expanded and refurbished in recent years, have had a major hand in attracting more people through the doors. Economic conditions have also played their part.
Managing director Phil Steele says: “From the point of view of the national picture, this Christmas will be tough for retailers. There are more internet sales than last year and obviously the economic situation is making things difficult.
“We are very fortunate that we are continuing to see more people coming through the centre than before and there will be more people than last year because of the things we have done to invest in the centre.
“Consumers seem to be gravitating towards large regional shopping centres and coming in via public transport because of high petrol prices. We are also seeing a spending spike around people’s pay day.”
Marketing expert Heather Scott sees huge changes in the way firms are reacting to shifting market forces.
She runs Winning Results Retail, a North East-based consultancy that works with some of the country’s biggest shopping centres and retail brands to help them improve their marketing capabilities.
“Everywhere I go around the country there are sales going on already, which is unprecedented,” she says.
“Retailers are offering 10 or 20% off brands that wouldn’t normally be on sale and the right product at the right price will always sell.”
Scott sees reason for optimism, with many of the region’s shopping centres enjoying strong visitor numbers in the early stages of the Christmas rush.
Although promotions and sales may be more beneficial to consumers than retailers, Scott points to the positives of retailers being able to get through more of their stock before larger discounts come into force immediately before and after Christmas Day.
“The sales have started earlier, but at a lower level to draw people into stores. Retailers are realising that it’s better to sell something at 20% now than at 50% in the week before Christmas.
“I think this year competition is a lot more fierce than in previous years and retailers are aware that people are shopping around and are much more astute in understanding that they can get offers.
“They are using sites like Amazon and price comparison sites, often on mobile devices while they are shopping, before they buy.”
Analyst Richard Perks, from business intelligence firm Mintel, agrees that this year a sea change has taken place in the way retailers are managing their pre-Christmas strategy.
“A lot of major retail chains already have quite big discounts, which is unheard of at this time of year,” he says.
“Fashion retailers in particular have been left with too much stock because it’s been so warm.”
But it can take more than discounts to persuade consumers to part with their cash.
In Newcastle, an outdoor city centre cinema, German market and the offer of free parking after 5pm have all contributed to boosting retail visitor numbers.
A central force in creating a more appealing visitor experience on Tyneside is NE1, the business improvement district which is part-funded by city centre retail tenants to manage what the area has to offer.
Commercial manager Stephen Patterson said: “Global economic conditions are harsh and Newcastle and the North East are not immune to these tough economic times, but the situation on the high street is not all doom and gloom.
“Positive things are happening in Newcastle and we continue to attract top brands to the city centre.
“In the last few months alone, Calvin Klein, Jaegar, North Face, Klaus Olsen and Pretty Green, the clothing brand run by former Oasis frontman Liam Gallagher, have all opened stand- alone stores in the city.
“They will soon be joined by Urban Outfitters. They are all welcome new additions to the retail offering in Newcastle.
“Free parking after 5pm in council-owned multi-storeys across the city has also proved to be extremely popular and continues to act as a major incentive for people to come into the city centre and enjoy what’s on offer.”
There’s no doubt that city centres with more to offer than just shops are a bigger draw.
Gateshead-based retail analyst Graham Soult says: “Markets, Christmas lights and events are an important part of creating a place that people want to go to.
“If you go to a large shopping centre or shop online you won’t get that experience.”
With the CBI predicting another decline in high street sales volumes in December, it remains to be seen whether the fortunes of the region’s retailers will hold up after the Christmas lights have gone out.
But for the time being at least, consumers can take advantage of major discounts before – rather than after – they’ve tucked into their turkey dinners.