British retailers discount to lure shoppers

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Britain's top retailers are hoping unusual pre-Christmas discounts can convince consumers to open their wallets during a holiday season that coincides with a looming recession.

Marks & Spencer held a 20-percent off pre-Christmas sale Thursday, the first time in years the retailer resorted to discounting during what should be some of the strongest sales weeks of the year to pull in shoppers who fear their own household finances may soon be in trouble.

It's a sign that Christmas 2008 could be a tough one thanks to the global financial crisis and economic downturn.

"This is M&S as a retailer responding to customers telling us that they are feeling the pinch," company spokeswoman Clare Wilkes said.

Department stores Debenhams and Selfridges also are among those cutting prices for short periods to kick-start the shopping season.

"This is definitely the most widespread promotional period in the run up to Christmas for quite a few years," said Sam Hart, a retail analyst at Charles Stanley Stockbrokers. "The retail environment is extremely difficult. The consumer is feeling increasingly under pressure."

Retailers across the board have indicated that consumers have reined in spending amid mounting unemployment and falling house prices.

Britain's economy shrank by 0.5 percent in the third quarter, and many expect the downturn to continue in a full-fledged recession into next year. The Bank of England is slashing interest rates and Prime Minister Gordon Brown is urging more government spending amid talk the government may announce new tax relief next week.

The Office for National Statistics said Thursday retail sales were down 0.1 percent in October from the previous month, better than the 0.5 percent decline recorded in September. The lower-than expected drop failed "to convey how tough conditions are for customers and retailers, said the British Retail Consortium, a trade group.

Inside the Marks & Spencer store on fashionable Oxford Street, Joy Thompson was examining sweaters and sleepwear as she pushed a baby stroller through the crowded store. Thompson, who was visiting from the Bahamas, said she had visited the store a day earlier but returned especially for the sale.

"I wasn't going to come back but then I heard on the telly that they had a sale, 20 percent off. Every discount helps," she said.

Many of the shoppers waited in line to pay for just a few items, but some had carts full of purchases. Melissa Demajo, a tourist from Malta, was among those. "You get carried away when you know there's a sale," she said.

That's the kind of shopper retailers are looking for this season to ensure the promotions they are offering push sales volumes up since discounts cut into profit margins.

Outside the Selfridges store on Oxford street, shoppers stopped Thursday to stare at windows filled with images of Santa. In one, the bearded guy pushes a shopping cart full of gourmet gifts; in another he is wearing a bit of bling, including a giant rhinestone belt. In neon writing, the phrase "The more the merrier" lights up each window.

Linda Ross, a Londoner doing her Christmas shopping, laughed at the slogan, noting that it was a bit out of sync with these belt-tightening times.

"It could be seen as a bit sarcastic," she said. On the other hand, she said, "It was probably planned before the recession."

Inside nearby Debenhams, Pat Davis stocked up on wallets, among items in the store on sale this week. "They're all good deals. We've only come especially for the sale today," she said. "It's working for me."

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