Faced by soaring bills, rising prices, expensive petrol and ever deeper concerns about their jobs, consumers are leaving their credit cards in their purses and wallets and are paying with cash, the chief executive of Debenhams said yesterday.

The thought of taking on yet more debt in an economic climate that grows gloomier by the day was, Rob Templeman said, generating a marked change in customers' behaviour at his stores. Moreover, dramatic failures, such as the collapse of Lehman Brothers, are having less effect than the general, pervasive slowdown.

“What happened yesterday is obviously not good news, but I'm not sure the fact that an American investment bank has collapsed is going to have that much of a direct impact on the UK consumer,” he said.

“What impacts them is disposable income, and the bigger worry is what is going to happen to credit card spending and whether the banks bring their [credit] limits down.

“People are already paying much more in cash. I'm only guessing, but it could be that they are wary and only want to spend the money they have got or that banks are clamping down.”

The comments came as Debenhams said that, despite tough trading conditions, it had managed to win market share from its main rivals in menswear, womenswear and children's clothing. Like-for-like sales in the year to August 30 fell by 0.9 per cent, but that was a far smaller decline than those reported recently by Next and Marks & Spencer. Shares in Debenhams closed down by p, or 1.75percent, at 42p.

Mr Templeman's remarks were supported by the British Retail Consortium, which said that cash was being used far more frequently at the checkout as customers became more cautious. It said that cash was being used for 60 per cent of all transactions, up from 54 per cent a year ago.

In addition, recent research by the British Bankers' Association has shown that the majority of customers who are still spending on plastic are clearing the debt within weeks to avoid interest charges. Credit card lending after repayments rose by only £186million in June, compared with £495 million in May.

Mr Templeman said that although consumers were becoming more cautious, often they were “trading up” and treating themselves when they did decide to spend. Much of the growth at Debenhams in recent months has come from its Designers at Debenhams range.

Mr Templeman said: “People are out shopping and what we are seeing is that they are spending more on designer ranges. They are thinking: ‘If I cannot buy as many things, then I'll buy something special.' They are looking for value, either on quality or on price. If you can offer both, they recognise that.”

He added that although Christmas would come late, there would be a rally in the run-up. “Every year people predict Christmas will be worse than ever,” he said, “but every year it's better than expected. It will come really late this year, but it won't be an unmitigated disaster.”

Philip Dorgan, a Panmure Gordon retail analyst, said that despite the resilient performance by Debenhams, concerns about its debt of nearly £1 billion would continue to hold back the share price in the medium term.

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