Where will the tills be ringing this Christmas?

Surveys so far this year have given the impression of retail armageddon on the High Street. With house prices stabilising after the interest rate rises of last year, and energy and fuel prices going up, even Bank of England governor Mervyn King is scratching his head as to the state of our economy, telling The Northern Echo only two months ago that it was an "uncertain picture".

One thing is for certain - the nation of shopkeepers has been suffering from sales gloom in 2005.

Those consumers who, in recent years, flexed their plastic power in the tinsel-clad shopping malls, are now paying in cash, having had their fingers burned by the nation's estimated £1 trillion debt mountain.

And with shops such as Woolworths making 50 per cent of its total sales each December, many analysts are asking how much merrymaking the high street will be doing this year.

Last January, retailers bemoaned Christmas 2004 as the worst since 1981 - despite the interim years of boom and bust, and a recession under the Conservative Government to boot.

This Christmas, they may be looking back on 2004 with fond memories.

The key to being a successful retailer during Christmas 2005, says Anthony Platts, of stockbrokers Wise Speke, is to be Internet savvy.

He says: "The talk is that a lot more people are using the Internet and the ones that are suffering are those without good websites."

Internet sales are expected to surpass expectations this year.

Royal Mail said recently that it expected to deliver a record-breaking 70 million items ordered online this Christmas - 15 million more than the same period last year.

One survey showed that £5bn would be spent online in November and December this year, £1.5bn - or 40 per cent - more than the same period in 2004.

The same research showed that nearly 60 per cent of people shop online at their home PC on weekday evenings, rather than braving the pre-Christmas rush of crowded, overheated shopping malls with frantic present-hunters.

The advent of broadband, with its faster connection, also means consumers are warming to shopping online.

By far the most popular items to buy include CDs, videos, books, travel and clothes. Amazon.co.uk is the biggest-selling website, with Argos.co.uk just behind.

Mr Platts believes Argos will be a winner this Christmas, with an increasingly strong online presence and a massive logistics operation to deliver goods on time.

He says shoppers are also starting to turn back to the old favourite, Marks & Spencer, which has struggled for more than a year, but which is beginning to lure consumers back with advertising and a year-long overhaul by chief executive Stuart Rose.

Although there will be winners and losers, Terry Robinson, lecturer in marketing at Teesside University, says that he doesn't expect any one particular sector to suffer.

"I think there will be those who do exceptionally well, and those who do exceptionally badly across all sectors," he said.

But he said that despite predictions of gloom, retailers will still be raking in massive profits across the board.

"We're talking increase in profits, not the profits themselves," he says.

"Just because sales slow at a particular shop doesn't mean they're not making millions - profits that other companies would love to have."

Mr Robinson believes that retailers will also benefit from consumers' reluctance to pay with credit cards.

"You have to remember that if customers pay with cash or debit cards, the retailers don't have to pay the credit card companies for the credit card transactions. Although people might spend slightly less, the retailers will be getting a bigger share of that spend."

But the supposed slowdown of consumer spending this year is widely believed to have a knock-on effect on Christmas sales.

Mr Platts said: "The boom of the property market, and then the slowing down in growth we have seen, means people realise their property isn't going up any more so they tighten their belts.

"We could see a pick-up, especially if we are in for a cold snap over the next few weeks.

"But I think the bargain retailers, such as TX Maxx and Primark, will be the ones with money in their pockets this Christmas. There will certainly be a lot of people looking for a bargain.

"It is a mixed bag, with some retailers doing really well at the expense of others, but on the whole I think sales will be lower than last year, whereas normally retail spend does go up every single year."

But Professor Robinson played down the effect of the slowdown of the property market and increasing energy costs for retailers' lack of sales.

"They're too quick to blame the market conditions," he said. "Sometimes retailers have to look at their own house before blaming a consumer slowdown.

"Sainsbury's, for instance, had a disastrous Christmas last year simply because they had a major stock problem.

"You can't sell empty shelves."

He said retailers were making their job "too complex".

"Retail is actually a very simple business," he said.

"People come into the shop, pick up goods, hand over the cash and go.

"As long as you provide what they want, when they want it, then it's difficult to go drastically wrong.

"But they've started to get carried away in their quest for more sales and are making things more complicated, which is where they are falling down.

"I despair of them when I go into a department store in January and there is swimwear for sale.

"I mean, who is looking to buy swimwear in Middlesbrough in the middle of January, unless you're lucky enough to be popping off to Sharm El Sheikh for a couple of weeks?

"It's ludicrous. Consumers don't want to buy T-shirts and summer wear until the majority of them are going on their holidays in June or July. When it's freezing outside, if you give them woolly jumpers, you're going to do well. If you try to sell them bikinis, you're on to a loser."

Department store John Lewis said last week that its sales had picked up as a result of the cold snap.

And other fashion retailers are hoping to see a rise in sales as the cold weather continues to bite.

Mr Robinson said: "Fashion is a very difficult sector to predict, because it's very fickle. But the cold weather is helping at the moment."

He said because fewer people were moving home, furniture stores and shops selling white goods were more likely to suffer.

Furniture group MFI made redundancies at its Stockton factory last month, blaming the retail slowdown. However, Sunderland-based ScS was upbeat when it posted its results last week.

Mr Robinson says furniture stores, and those selling big-ticket items, may struggle because of the advent of e-shopping.

"Customers are more demanding," he said. "If you buy a book from Amazon, it will deliver within a couple of days.

"Consumers have become used to that and they are more impatient. If they order a sofa, they don't want to wait six weeks for it anymore. If they order items from an online provider they can often get them more quickly."

DIY stores, less reliant on Christmas sales than their high street peers, have also seen a slowdown over the whole year.

Food sales, on the other hand, are a safe bet throughout the year, especially at Christmas.

Mr Robinson said: "The problem supermarkets are finding is that people are less inclined to do a big Christmas shop now, because they're open every day except for Christmas Day.

"That means consumers are more likely to stagger their purchases, whereas a few years ago they would go in on December 22 or 23 and buy everything they might need for the whole Christmas week. Also, supermarkets are putting aside more floor space for non-food goods, such as clothes and electricals, so they are becoming more reliant on those non-food sales. But the supermarket's online sites should do well. The good thing about e-commerce is that the retailer can just order in what it needs, when it needs it, so there is no issue with stacking shelves and hoping that items will be sold. As long as they have a good relationship with their suppliers, they are likely to do well."

Figures show that online shopping is growing 130 times faster than high street sales.

Last year, Morrisons, Woolworths, House of Fraser and Marks & Spencer all said the festive period was disappointing.

WH Smith saw sales drop one per cent and at Woolworths sales were flat.

However, Monsoon, Tesco, HMV, Jessops, the Body Shop, and Ottakar's all saw like-for-like sales rise last Christmas.

They will be hoping they can hang on this year and see further increases.

Mr Robinson, despite believing that sales will be down on last year, says retailers will not suffer too much this Christmas.

"They're expecting it, and they're prepared," he said. "So they haven't ordered as much stock as they might have done.

"In that sense, they will sell all the stock they have bought in, so things won't be too bad. And they won't have to put as many items on sale in January, so those hoping for New Year bargains may be disappointed."