Spain\'s ailing retailers slash prices to lure shoppers

Spanish retailers are offering deep discounts in their post-Christmas sales to try to get cash-strapped shoppers to open their wallets as a sharp economic downturn drags painfully on. Shoppers packed into an outlet of Spanish clothing store Blanco in central Madrid on Monday, the first day of the official sales period, drawn by a 50 percent discount on all items in its winter collection. \"It is hard to resist, you can buy much more clothes for the same amount of money if you wait until after Christmas,\" said 21-year-old university student Carmen Quijada as she examined a pile of brightly coloured acrylic sweaters on sale for 9.99 euros ($12.95). Spaniards have seen their disposable incomes squeezed by government spending cuts and muted wage growth as the jobless rate has soared to an unprecedented 21.5 percent, with more and more people waiting for the sales to make their purchases. For the shops, the post-Christmas binge -- which accounts for 20 percent of clothing retailers\' total sales -- are an opportunity to make up for a sluggish year and get rid of piles of unsold stock. Three-quarters of Spaniards plan to spend more money during this post-Christmas sales period than they did last year, according to a survey of 2,000 consumers carried out by the Federation for Independent Consumers. Every consumer will spend an average of 90 euros this year, a 5.8 percent rise over 2011 and the first increase since the economy tanked in 2008 when a property bubble collapsed, according to the consumer group. \"The consumption pattern is changing. In recent years, with the economic crisis, people wait for the sales. They don\'t spend at Christmas so as to spend during the sales,\" said the head of clothing retail lobby group Acotex, Eduardo Vega. The biggest discounts are offered by chain stores, especially those selling clothes. Along Madrid\'s main street, the Gran Via, large signs advertising discounts of up to 50 percent hang from store windows as packs of shoppers loaded up with bags walk by. \"There are more items on sale at half off this year and more items with discounts,\" said Raul, a 21-year-old shop attendant at an outlet of Swedish fashion group H&M on the Gran Via as he folded shirts. Stores offered discounts of between 20-30 percent before Christmas and now must do even more to attract customers, said Vega. \"Sales throughout the year were not satisfactory and this is a way to give them a boost,\" he said. The Christmas discounts helped boost sales at clothing retailers in December, which inched up 1.0 percent compared to a decline of 3.0 percent in the previous year, according to Acotex. The group predicts that for all of 2011, sales will be down around 1.0 percent, a fourth consecutive yearly decline, but will stabilise this year. Spanish retailers have been hit especially hard by the economic downturn. Over 37,000 small- and medium-sized stores closed their doors last year, according to the Spanish Confederation of Commerce. The pressure on consumers\' disposable income -- and by extension on Spanish retailers -- is expected to continue in 2012. Spain\'s new conservative government on Friday unveiled spending cuts and tax increases to save 15.1 billion euros this year as it announced the 2011 deficit would top previous forecasts. The measures include higher taxes on salaries and on capital income and an extension of a freeze on public sector wages.