Retailers celebrate surge in spending

Retailers and holiday tour operators have reported a surge of business in the week since Christmas, suggesting that the elusive feelgood factor may at last be breaking through.

But optimism over a revival in consumer confidence will be tempered by the fact that it has taken unprecedented price-cutting to tempt the public to spend.

The package tour industry expects to break the 10 million barrier for the first time in 1995. Bookings so far indicate that last year's record 9.5 million holidays will be exceeded by as much as a million.

"Immediately after Christmas the weather kept people at home," said Richard Carrick, marketing director of Airtours, the Tradewinds group. "But since then it has improved day by day and we are 28 per cent up, year on year."

He added that Tradewinds was breaking records with offers such as seven nights in Thailand for £499. There had also been increased demand for the firm's US and Canada brochures, which carry discounts of around 15 per cent.

While the tour operators have been squeezing lower prices out of hotels and airlines, the main UK travel agents have been offering additional discounts of as much as 20 per cent.

"People seem to have a certain amount to spend. They are finding that they can travel much further for the same money than in 1994, so they are trading up," Mr Carrick suggested.

This has been borne out by the greater popularity of Florida and the Greek islands, which have been challenging the traditional dominance of Spain in the mass market.

Shoppers have been flooding the high streets in search of other bargains, too. Large store chains report that all signs of the consumer gloom that held back sales for most of 1994 have evaporated over the last few days.

Selfridges, the Oxford Street department store owned by Sears, said that the first few days of its winter sale were the best in its history. "There does not seem to be any consumer pessimism at the moment," a spokesman claimed.

Marks & Spencer and Debenhams also reported hectic business and packed stores in the days after Christmas. More cautiously, the John Lewis Partnership said that it was "very satisfied" with turnover last Thursday, the first day of its sale, when it stayed open until 8pm.

"Business does seem to be good, although this is partly because retailers are making offers in the sales that consumers cannot refuse," said James May, director-general of the British Retail Consortium, which represents high street retailers.

Many retailers had expected a disastrous Christmas and New Year season because business remained stubbornly slow in the first half of December. But they were rescued by a cold snap a few days before Christmas, which sent shoppers out in search of winter clothing.

This was supported by Barclays Bank, the biggest credit card issuer and operator of Britain's largest cash dispenser network. It said that it handed out £304.6m through its dispensers in the week before Christmas - 6 per cent up on the corresponding weeklast year. December's Barclaycard spending was up 9 per cent.

Several retailers attributed increased sales to longer opening hours. "In the run-up to Christmas, late opening made the difference," an Asda spokeswoman said. Asda kept its supermarkets open two to three hours longer than usual, until 10pm.