Close-Up: Live Issue - Will winter bring us any festive cheer?

main high-street retailers.

At least, that's what normally happens. But you might have noticed this
year that the economy is in a bit of trouble, and consumers are
beginning to cut back on their spending. This could pose real problems
for retailers, who rely heavily on the festive period.

"Some retailers do around 60 per cent of their year-round business
during the Christmas period, so you can see why the time is so important
to them," Richard Dodd, a spokesman for the British Retail Consortium,
the trade association for the British retail industry, explains.

"But it is going to be a tough Christmas this year, there's no question
about that. Christmas was notably weak last year, and conditions running
up to the period this year are even worse."

As consumers begin to spend less, and become more willing to shop around
to bag a bargain, the competition between retailers is certainly going
to intensify.

"Christmas is always a hugely competitive time for retailers, and this
Christmas will probably be more competitive than ever," Richard Perks,
the director of retail research at Mintel, the consumer, media and
market research specialist, agrees.

"The name of the game always used to be retailers building up their
premium ranges. Now, all of a sudden, you're getting brands like Tesco
(which recently ruled out the use of any extravagant celeb-fest around
the Christmas period) positioning themselves as the country's biggest
discounter."

But will it work? You can see why Tesco was eager to reposition itself.
By "reflecting the mood of the nation" in its approach to Christmas,
consumers may feel more empathy with the brand than if it churned out
another glossy ad featuring the overtly expensive Spice Girls.

But Perks warns that while a change of tack may sometimes be worthwhile,
retailers must not stray too far from their comfort zone.

"It's imperative that retailers continue to be true to their own
markets," he says. "It's still all about understanding your customers
and not pretending that you're aiming your products at someone else,
just because they're the people who are spending money at the
moment."

So the nervy economic climate is certainly going to become a factor for
high-street retailers this year, but what about the other supposedly big
threat - the internet? People are doing all their Christmas shopping
online, we're repeatedly being told, and that will eventually kill off
all the high-street shops that we know and love.

This isn't actually the big problem we think it is, though, according to
our analysts. "There's a huge myth out there that online is killing the
high street, which is just plain wrong," Dodd says.

"The figures are very clear on the proportion of where consumers spend
in the retail sector. Six per cent of all retail spending occurs online.
It's grown rapidly, but that still means that 94 per cent of consumers
still shop on the high street."

Where people shop online must also be noted, Perks says. With Tesco
being the country's biggest online retailer, it seems that, barring a
few exceptions, such as Amazon and Play, the main high-street retailers
are the ones dominating the online market too.

Perks says: "Online is just another service to customers rather than an
individual medium in its own right. People will shop online more and
more because going out to buy presents is a pain, but, crucially,
they'll still be using the same retailers that they do in the high
street."

"All retailers are doing is trying to get people to shop with them,"
Dodd adds. "They don't care as much where the shopping's being done,
whether it's in-store or online. They just need to make sure that they
are stronger than their competition in terms of offering the best value
and by advertising themselves more efficiently."

More efficiently doesn't necessarily mean reducing adspend, but some are
certainly doing that. Morgan Stanley says that retail adspend was down
in Novemer, although demand may pick up in the run-up to Christmas.

Speaking to the major retailers, Woolworths assures that "as per
Christmas 2007, we will have a multimillion-pound Christmas ad
campaign", while Sainsbury's also confirms that its marketing this
Christmas will be just as prominent as normal. Another of the main
players, Boots, says that the festive season is something for which the
retailer has been preparing for a long time now, and is convinced that
by emphasising value, its taking the most sensible approach.

"We've had a robust Christmas plan in place for a number of months, and
this consists of our three for two mix and match offer, where customers
choose three gifts and get the cheapest gift free," a spokeswoman for
the retailer says. "We're confident with the Christmas plans that we
have in place."

So, with a number of the major retailers ditching the celebs and
focusing on value, Marks & Spencer becomes an even more interesting
proposition this Christmas. Unlike the rest, its glamorous, luxurious
approach seems similar to previous years. Take That will be appearing in
its Christmas ad, and are rumoured to be joined by a host of other
stars, including Myleene Klass and Lulu.

It's an approach that Sarah Gold, the managing partner of CHI &
Partners, is wary of.

She says: "Consumers are looking for retail partners who get them and
get the situation that they're in at the moment. If they ignore this and
try to carry on as normal, then they'll seem out of place and out of
touch with society, and that could spell real trouble."

Instead, Gold believes that her agency's Argos ad, which focuses on the
benefits of a no-frills, simple service, is the right approach for
agencies to take this year.

"When approaching their ads, retailers don't want to look indulgent;
instead, they need to let the consumers know that they won't be paying
for things that they're not getting, and, by that, I mean all the
add-ons and glitz that people just don't care about in times like
these," she says.

In the current climate, even the customary influx of shoppers who hit
the January sales will be down on the normal number, a spokesman for
Verdict Research, says. "Retailers cannot fall back on the promise of
high volume sales in January," he says. "In the face of job losses and
the arrival of post-Christmas credit-card bills, consumers will hold
back from any unnecessary spending, particularly on big-ticket items,
precipitating a raft of further retail casualties."

So, with consumer confidence seemingly rattled, retailers will have to
ensure they take the right approach in what is such an important period
for them. Retailers need to maintain a steady flow of well-targeted
Christmas ads, rather than using the uncertain economic climate as an
excuse to reduce marketing spend any further.