John Lewis upbeat in spite of retail gloom

The amount of money that shoppers spend on buying Christmas presents is expected to fall for the first time in a decade, research published today predicts.

Retailers' hopes that a shopping revival would salvage one of the worst years in recent memory were dashed by the report which forecasts £400m less will be spent on gifts than last year.

The consultancy firm Deloitte said the 1,000 adults questioned for its annual survey intended to spend 3 per cent less on gifts than last year. The average amount someone will splash on presents for family and friends is £310, which drops to £266 for residents of East Anglia.

The firm's annual Christmas retail survey, published today, predicts that total spending on gifts will drop to £14.7bn from £15.1bn last year. Instead, more money will be spent on socialising, continuing the trend that has sucked cash away from the high street during the year.

Despite the bearish tone struck by the report, John Lewis said it had high hopes for Christmas. Charlie Mayfield, its managing director, said he was "feeling positive" after a 5.8 per cent jump in sales last week.

"We have the perfect conditions for selling clothing," Mr Mayfield said, referring to the first cold snap of the winter. "I am really encouraged by the way things are coming together."

Already the department store chain's Peter Jones outlet has sold out of one of this year's hottest Christmas accessories: black Christmas trees. Paul Hunt, who runs the King's Road store, said two shoppers fought over the remaining black tree last week. Black Christmas trees have been the surprise hit of the festive season as consumers seek a minimalist alternative to the usual garish holiday decorations.

The chain's rivals are less upbeat, with nearly two in three of the 270 retailers quizzed by Deloitte predicting their sales would stagnate or fall this year. This is twice the amount of pessimism expressed by the sector last year. Roger Bootle, the economic adviser to Deloitte, said: "It is certainly set to be a tough Christmas, which will set the tone for the year ahead."

Four in five shoppers said they would use cash or debit cards to pay for gifts rather than amass more credit card debt, sending a clear signal that consumers are nervous about their finances.

Richard Lloyd-Owen, the head of consumer business at Deloitte, said the fall in money being spent could reflect cheaper prices on the high street. With so many retailers offering three-for-two offers on their gift lines, clever shoppers could get more for their money, he said.

The consultancy said there was not likely to be one top toy, but predicted that mobile phone ringtones, Roboraptor, an electronic dinosaur, and a Darth Vader mask would be among the top requests from Santa.

In a repeat of last year, the supermarket sector and the internet are tipped as the likely winners this festive season. The push into non-food lines by Tesco and J Sainsbury means that 8 per cent of shoppers expect to buy most of their gifts as well as their food from supermarkets. Deloitte predicted a 50 per cent increase in the use of the internet, with 6 per cent of respondents expecting to shop online.