KEY POINTS:
The shoppers are out, the malls are buzzing, and the cash registers are singing.
Salvation, it seems, is finally here.
The malaise plaguing retailers over much of the year seems to have finally been broken by the traditional Christmas urge to splurge, with most expecting the all-important November-December turnover to at least match last year's bumper sales.
But there's a faint sense of panic - and not just from the last-minute shopper who knows that $9 pineapple-ylang ylang scented soap just won't quite cut it for the wife.
Industry insiders talk of merchants taking massive margin hits in order to push products out the door. Some, as the murmurs go, are even selling inventory at no profit just to get some cashflow running through the business.
The deep discounting and aggressive promotions began as early as November - a reflection of the mood at the discretionary end of the spectrum heavily hammered by a sluggish winter that never lifted with warmer weather.
All they wanted then for Christmas were some shoppers.
"The fight for the consumer is pretty intense, and everybody's got to have an offer," said Retailers Association chief executive John Albertson.
"Margins are getting squeezed. There isn't a lot of margin in retail to start with. If you look at a normal trading pattern, a retailer on average is going to make somewhere around 5.5 per cent net on sales. Some sectors you might be getting as much as 7 or 8 per cent, other sectors will be as low as 3 or 4 per cent. There's not a lot of room to manoeuvre."
Briscoe Group managing director Rod Duke said while his Christmas sales were tracking well, the industry was in the throes of an unusual slump.
"I've been in this business since I was 16. And I must tell you, I've never seen anything quite like this - ever, anywhere - that I've been.
"There is no question there is a better sentiment in the market with the change of government, interest rates, fuel and all that sort of thing. But what now seems to be coming through is job security, because there is so much bad news to be read in the newspapers almost every day. It just smells as though there's a bit more to come."
The slump has already claimed some high-profile casualties - including top-end homeware store Eon Design, and this week clothing accessories chain Tie Rack.
Even established players are not immune, as evidenced by the closure of 50-year old Remuera establishment Garlands Design.
And many are picking there'll be more blood on the retail floor in coming months.
Staples Rodway director Gareth Hoole is handling a number of retail insolvencies, including that of Eon, Garlands, and clothing store Texas Radio and The Big Beat.
"The downturn is going to be across the board, it's just the question as to the ability to withstand it.
"Typically, the smaller player, who specifically has gone and geared up for Christmas and maybe hasn't sold as much of their inventory as they thought they might have, finds that they're not able to actually withstand that additional cost of holding that inventory."
Analyst Tim Morris, of Coriolis Research, agrees. "With financing drying up, if you hit a rough patch, the banks aren't going to be there to bail you out. And so I think there's a few around right now that are living at the discretion of the banks.
"There's a number of sectors that do a huge amount of their turnover in the December months - food isn't like that, but some sectors would do 30 per cent of their turnover in December.
"If they're down 10-20-30 per cent on that, I think they're gonna come to January-February, and they're not going to have the gas in the tank to last to the next holiday period to dig them out of the hole.
"I think we could see significant layoffs and bankruptcies in the sector come February."
Excluding the effects of inflation, Morris expects this year's Christmas sales to match last year's - although January could be a different story.
"You just see it so many years before where we get there in the end at Christmas.
"But then last year especially, there was that hangover that never really ended - you felt the numbers would just continue to track downwards.
And I think it's going to be even worse next year.
"Some of the retailers are definitely trying to move product now because they can see that it's going to be easier to sell something before Christmas than it's ever going to be to sell in January or February. But you can only discount it so much before you're losing money on it."
The Retailers Association's Albertson said despite a relatively staid start to the season, expectations remained of a strong surge in the final days before Christmas.
"Our view is that Christmas should hold up to the same kind of volume levels as last year."
Mark Gibson, general manager of CourierPost, concurred.
"We're seeing the dual effect of the credit crunch and a slump in retail sales reflected in our customers' ordering behaviour - retailers are reverting to short orders and fast replenishment.
"They are keeping lower levels of stock on hand to keep their reliance on bank credit to a minimum."
Figures from Paymark, which processes 75 per cent of all electronic transactions, showed New Zealanders spent a total of $1.76 billion in the first two weeks of the month - up just 1.7 per cent compared with the same fortnight in 2007.
Paymark chief executive Simon Tong said the low spending figures, coupled with the fact that Christmas Day falls on a Thursday this year, suggested that shoppers may be waiting until the last minute to do their Christmas shopping.
"The last time Christmas Day fell on a Thursday was in 2003 and during that period we saw a sharp spike in spending on the three weekdays prior to Christmas. In a typical week, spending peaks over the weekend but we may see this year follow the same trend as 2003 with a last-minute retail rush."
The next five days then could prove the decider between businesses that survive and thrive, and the ones that will be holding their final sales.
Said Albertson: "What we will see is that the very good retailers will survive - not only survive but they will do well and they will learn and grow from it."
Christmas sales tales
Noel Leeming Group
Andrew Dutkiewicz
Chief executive
Sales have lifted every week since the election and were tracking in line with last year. Big ticket items like TVs and computers were tracking slightly higher because of expectations of a price rise in the new year.
"I think people are taking the opportunity now while the prices are still very competitive."
The Warehouse Group
Stuart Yorston
General manager of marketing
Sales were in line with expectations, with children's clothing, toys, DVDs and computer games doing particularly well.
He's expecting "bedlam" in the three days before Christmas.
"There's still lots of people out there, based on our knowledge of the market, that haven't done their Christmas shop yet. And based on when it fell on a Thursday the last time, a lot of people take those days off and they shop."
Briscoe Group
Rod Duke
Managing director
Trading in line with last year's levels.
"There've been some pretty good days, and there've been some ordinary ones.
"I guess if I was to characterise the sales between today working back to December the 1st, they just seem to be all over the place. There's really still that air of unpredictability about them."
Pumpkin Patch
Matthew Washington
Chief financial officer
Sales were in line with expectations, although softer than this time last year.
Microsoft New Zealand
Frazer Scott
Director of business management (entertainment & devices division)
XBox 360 console sales were up 105 per cent in November. December sales remain strong, so quietly confident of a solid Christmas period.
