Summer sales come early as retailers struggle to combat credit crunch

EARLY summer sales in shops across Scotland eased the financial pain for shoppers yesterday as retailers took action to combat the credit crunch.

Flagship stores such as Marks & Spencer, John Lewis, House of Fraser and Laura Ashley were all discounting goods to lure consumers back as surveys showed customers facing rising household bills were trimming spending.

Summer sales usually start in July – when retailers get rid of unsold summer stock – but retail analysts said they had been brought forward to stimulate falling consumer spending.

Neil Saunders, a spokesman for retail research company Verdict, said: "It is an effort to get people into the shops and get them purchasing again. Traditionally, the sales were always around Easter, after Christmas and mid-summer, but that seems to have broken down and people just seem to be discounting whenever they need to."

According to market research company Mintel, almost three in five adults have recently cancelled spending plans due to uncertainty over their finances. Half of them confirmed the rise in the cost of everyday essentials had led them to cancel either holiday plans or home improvements.

Market research company GfK NOP said consumer confidence was at its lowest since the last recession nearly 20 years ago.

Rachael Joy, head of its consumer confidence team, said its measure of major purchases was "a massive 27 points lower than this time last year".

"Consumers' confidence in the economy over the next year, plus a reluctance to make major purchases, reflect the popular expectation of a recession. The future months may see even further falls in confidence, as increasing inflation and dropping house prices make reigning in their spending even more likely to the UK consumer."

In Scotland, Marks & Spencer stores were holding a six-day clearance sale ending tomorrow, House of Fraser outlets were completing a two-day 'spectacular sale' and John Lewis was offering up to 20% off clothing.

BHS cut certain products to half price and Laura Ashley was offering 'buy two, get one free' deals on clothing and jewellery, and reduced home furnishings by up to 25%. In Edinburgh, department store Jenners yesterday completed a two-day sale.

Consumers were out in force. Louise Williams, a 28-year-old communications worker shopping on the city's Princes Street, said: "I love it. I'm always looking out for bargains."

Ann Crighton, who is employed as a sales representative, said: "I think all these sales are part of the reason for the credit crunch. People are being encouraged to spend on luxuries rather than just essentials."

Not everyone was tempted by the bargains. Vicki, a 23-year-old recruitment consultant, said: "I've not got any money to spend in the sales anyway. All my extra money goes on paying off the debts that I've already run up."

Valerie Reid, a 43-year-old lecturer, said her family was cutting back on non-essentials and sales would not entice them to spend more. "We have noticed that our weekly food shopping prices have really gone up, and the cost of fuel. My husband and I both have cars so we've noticed that especially. With so much more cash going out on necessities, we're not really bothered about buying so-called bargains."

Consumers have been hit by the soaring cost of fuel and food bills over the past few weeks. Last week, it emerged that the average cost of weekly groceries had risen by £7.48 to £136 since January, representing a 5.8% rise. The average wage has risen by only 2% over the same time period.

The cost of essentials, such as fresh fruit and vegetables, has risen the most, with an almost 16% increase in prices. Next highest were laundry necessities, such as soap powder and toilet rolls, also up almost 16%.

Petrol costs have also escalated sharply with unleaded selling at around £1.26 per litre and diesel at more than £1.40 a litre.

Mintel has reported that mortgage costs have more than trebled between 1997 and 2007, and now account for 25% of all consumer spending. Ten years ago, the figure was nearer 14%.