The blizzard of sales posters in shop windows that has become a fixture of postChristmas trading is returning to high streets out of season.

Retailers have begun a new wave of discounting in the hope of jump-starting spending, after a January sales splurge petered out into a poor February and March for retailers, according to analysts. Marks & Spencer, Debenhams and Next have all run mid-season sales as trading continued its downward trend.

Next week M&S is expected to reveal a deepening of the slide in sales it recorded over Christmas, after Thursday’s bleak official figures on retail sales.

Industry observers have warned that consumers may not benefit from the surge of apparent price-cutting. A sharp rise in costs, driven by the exchange rate, means that many analysts expect retailers to offer mark-downs from starting prices up to 10 per cent above last year.

About 60 per cent of retailers are actively discounting, according to PricewaterhouseCoopers, marking a return to the levels observed in early December. Next said that it was expecting a higher level of promotional activity across the market, although price cuts would not reach the extent of the January sales.

Jason Gordon, retail director at Ernst & Young, said: “There’s certainly more discounting than you would expect to see at this time of year. As the year progresses, we will continue to see very high levels of promotional and market-driven activity. It will become increasingly the norm.”

Next, led by Simon Wolfson, insists it will not cut prices in response to declining sales, because it would hit profit margins and erode its ability to sell at full price.

The company said in its year-end statement this week: “Next intends to continue trading at full price at all times, other than at our traditional end-of-season and mid-season sales. Any increase in promotional activity must logically involve either the surrender of margin or the artificial raising of initial prices in order to offer them as a ‘bargain’ at a later date.

“Whilst some have made a success of this strategy, we do not believe that this would be right for the Next brand.”

Analysts are expecting a like-for-like sales decline of up to 10 per cent in M&S’s general merchandise division, which includes clothing. The figures are expected to pile more pressure on Sir Stuart Rose, the M&S executive chairman, whose role of combined chairman and chief executive has drawn renewed criticism from major shareholders.

Next’s like-for-like retail sales declined 6.5 per cent in the year to January 30, suggesting that it was losing share less dramatically than M&S, despite its reluctance to cut prices.

Nick Bubb, a retail analyst at Pali International, believed that the flurry of promotional activity would not be visible in retailers’ profit margins – suggesting that any increase in discounting is offset by higher original prices. “Debenhams are marketing promotions more loudly, but I think the margins are flat, which must mean that they are bringing prices up to mark them down . . . Retailers who preserve their pricing power in the long-term will do best. John Lewis and Next are about the only two left in that camp.”

John Lewis, the department store chain taken as a bellwether for consumer spending, said that sales at its 27 stores fell 12.6 per cent in the week to March 21. The decline was due to a 23 per cent fall in electricals and a 15.6 per cent fall in its home department. It said that the figures were confused by the timing of Easter this year, but the decline alarmed analysts. The breadth of John Lewis’s range means observers look to it for an insight into the economy at large, and sales remain 7 per cent down for the first seven weeks of the financial year.

Online launch

A website backed by a French supermarket is to compete with Amazon and Tesco to attract recession-hit consumers.

Cdiscount, part of the Casino Group, sells electrical goods, clothes, homeware and wine, and will be launched next month.

Shoppers are increasingly turning to the internet — in the final quarter of last year the number of online retail searches rose 143 per cent.

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