Record weekly sales at John Lewis have raised hopes of a bumper end to the Christmas shopping period but there are fears that the wider retail sector could be left with a profits hangover after heavy discounting.
The department store rung up £164.4 million in takings in the week ending on Saturday night, a 4.2% increase on last year - including improvements in fashion and home ware - and 31.8% up on two years ago. Online sales rose 31% year-on-year.
Retailers have been going through a critical few days which for many represent a make-or-break chance to restore their fortunes at the end of a difficult 2013.
Large promotions have included a 30% discount across clothing lines at Marks & Spencer, as well as price cuts at Debenhams, Gap, Argos and BHS.
John Lewis said trading this year over the Christmas period had taken a different shape with an early peak flattening out, then a surge in the final week, with the latest weekly sales up 9.7% on the week before.
The retailer said further busy days were expected on Monday and Tuesday.
Paula Nickolds, buying and brand director at John Lewis, said: "It's clear that much of Britain has yet again taken shopping for Christmas right up to the wire."
Howard Archer, chief UK and European economist at IHS Global Insight, said the pick-up was "solid rather than spectacular".
He added that while John Lewis's figures provided a useful insight into spending patterns, its customers tended to be less affected by the squeeze on incomes than the average consumer.
More broadly, many hard-pressed consumers appear to have deliberately delayed shopping in the hope of finding last-minute offers, he said. Retailers were conscious of the difficulties they face, especially after lacklustre sales in October and November.
"It is apparent that substantial late discounting and promotions is occurring. The next couple of days may very well see even more.
"While this may well end up giving a significant late boost to Christmas shopping, it will obviously be at the expense of retailers' margins.
"At this stage, the evidence suggests that this will not have been a sparkling Christmas for retailers, although it is likely that markedly increased internet sales will have lifted overall spending."
Sally Eden, spokeswoman for the New West End Company, representing 600 retailers in Bond Street, Oxford Street and Regent Street, said yesterday that the shopping district had been "very busy".
She said footfall had steadily risen across the week amid a sense of urgency with Christmas just a few days away.
"This is the last weekend and I think shoppers want more for their money," she said.
"The retailers are working hard to do that but they won't go into full sales mode until Boxing Day."