The Retail Week

The opening salvo in this year's retail Christmas campaign was fired at the start of this month, when some of the biggest store groups unveiled their seasonal ads.

However, it looks as if the trench warfare really started this week, with Debenhams' promotion on Wednesday and Thursday.

The department store group staged a two-day Christmas spectacular, slashing up to 25 per cent off prices across the shop. Debs opened from 8am until midnight in anticipation of shoppers in droves.

Anecdotal reports suggest the retailer was probably not disappointed. One of my colleagues reports the Oxford Street branch was 'hectic' and, as a customer, she was impressed with the extent of reductions on the latest fashion lines to hit the shops, not just older ranges.

So, when the post-mortem is held on Christmas 2006, Wednesday November 15 will probably go down as a red-letter day. The question that is unanswered for now is how other retailers will react - will this first major discount day prompt others to mount similarly high profile promotions, and how deep will the discounts be?

Big promotions will certainly be a characteristic of the Christmas period, but some retailers are likely to resist the temptation to go over the top. The signs are that, despite continued tough trading conditions, the retail market is quite perky.

Earlier this week, the latest National Statistics data showed retail sales volumes up 0.9 per cent in October - the biggest rise since November last year. The annual growth rate climbed from 3 per cent to 3.9 per cent.

There were also signs that deflationary pressure is easing up. In clothing, deflation came back from down 3.5 per cent to down 3.3 per cent.

The outlook for Christmas doesn't look too bad and well-run retailers should at least match last year's sales rises for the period. A good Christmas will put store groups on the right footing for the new year, when it is possible that consumers may rein in spending as the interest rate rise bites. That's a bridge retailers can cross when they come to it.

In the meantime, the battle for spend is well and truly on.

We reported this week (Retail Week, November 17) on Indian giant Reliance's recruitment of Tesco and Asda executives as it begins its retailing offensive. Reliance's retail venture is probably one of the biggest stories in world retail at the moment and other local retailers - such as HyperCity - have also wooed UK retailers to their ranks. Expect that trend to continue. The opportunity to make an impact in one of the world's fastest developing retail markets and a high standard of living for expats are two big attractions. Surely it won't be long before a really well-known director jumps ship to an Indian venture?