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Pre-Xmas discounts deeper than last year

Discounting on the high street this Christmas is deeper and more widespread according to the Ernst & Young Christmas Retail Pricing Survey.

Pre-Christmas discounts have averaged 36% off for the from November 12 to December 17. Although not directly comparable this was against an average of 35% off for the whole period of Christmas 2006 and 33% in 2005.

The spread of markdowns is also as wide as in 2006. Markdowns start at 10% this year but are as high as 80% off in some instances.

The largest sector markdowns are in footwear, which is typical for the time of year. Discounting in clothing is highly variable with markdowns up to 75% off.

Jason Gordon, senior manager for retail at Ernst & Young said: "Consumers have lost the feelgood factor due to the credit crunch, falling house prices and rising household costs. It's no surprise that some retailers, particularly in the clothing, footwear and entertainment sectors, are having to offer such deep discounts to woo cash-strapped shoppers."

Gordon added: "Like last year, we're seeing a huge range of promotional techniques on show as retailers strive to differentiate their offer. The discounting landscape is complex - it can be confusing for the customer. It's also debatable whether retailers are actually able to measure the impact of each 'sale' or promotion, and more importantly, protect margins at the same time as driving sales growth."

Ernst & Young said it expected Christmas trading to be "muted" but not a disaster. Head of retail Gavin George said: "Strong growth from online and solid performances from grocery will prop up overall retail sector performance. We're forecasting very low like-for-like growth across the retail sector as a whole, with big variations in performance between the winners and losers. The early part of next year is set to be even tougher for retailer, as cautious consumers rein in their spending even further. Consequently, we are likely to see an increase in retailer profit warnings and even further casualties on the high street."

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