Sustained improvements in sales are still the exception among retailers. Alex Turner reports

THE high street has proven to be an unforgiving battleground during the downturn. Some historic, established retailers have shared a common fate with many smaller independents – and every size in between – in being unable to survive.

On the other hand, it has not all been bad news. Department store chain John Lewis, often described as the bellwether of middle-class spending, has more than weathered the economic storm.

This morning, the board of John Lewis Partnership, which includes Waitrose, will meet to finalise details of its bonus pot – which is expected to see its 69,000 employees share £140m.

The employee-owned partnership is being tipped to award bonuses of 14% of annual salary, one percentage point higher than last year.

The announcement to workers on Thursday will come hours after John Lewis releases its annual results. Analysts are forecasting a rise in pre-tax profits for the John Lewis and Waitrose group of 13% to £315m for the year to January 31.

A rise in store numbers and the tendency for economising shoppers to seek stay-at-home treats rather than eat out has helped the retailer.

It will be the first set of results that include a full-year performance from John Lewis’s Liverpool One store.

The partnership publishes weekly sales information to keep its employee owners informed.

It didn’t provide aggregate figures for Liverpool for the first-half of the year because it was comparing it with an incomplete half-year from when it moved into Liverpool One, in May, 2008.

However, in the second half of the year, its Liverpool store enjoyed sales growth of 7%, boosted by a strong, sustained run of improved year-on-year weeks from mid-October.

Across the 29 John Lewis department stores, it had sales increases of 3.4% in the first half and 10.3% in the second half, which included the critical December and post-Christmas sales trading periods.

At the year-end, Andy Street, managing director of John Lewis, said the trading performance left it “admirably placed for the new trading year”.

But he has previously warned that he is “expecting flat sales” this year, as uncertainty surrounds the state of the economy and the measures that will be taken by the Chancellor after the forthcoming general election.

Economist Howard Archer, of IHS Global Insight, is cautious about the general outlook for retailers across the UK, despite some superficially-positive sales figures from the British Retail Consortium, see panel.

He said: “We continue to suspect that the upside for consumer spending – and hence overall economic growth – will be limited in 2010 as households still face very challenging conditions, notably including high unemployment that is likely to rise further, low earnings growth, high debt levels, and January’s VAT hike.

“Meanwhile, still serious concerns about the economic outlook and jobs are likely to maintain consumers’ desire to improve their personal finances.

“Consumers will also be wary that further out they are very likely to face higher taxes as part of the major corrective action that will be needed to rein in the government finances.

“At least, though, the Bank of England seems unlikely to raise interest rates any time soon, so low mortgage rates should continue to support consumers' purchasing power.”

This uncertainty about the future outlook is matched by the confused picture across the retail sector.

Knowsley-based Ethel Austin was unable to wait any longer for the recovery to arrive and improve sales, and slipped into administration last month, while independent Liverpool retailer Lewis’s has also called time on its Renshaw Street operation.

Ged Gibbons, chief executive of Liverpool BID, said: “Lewis’s was finding it difficult for the last couple of years. As an independent anchor store with City Central, we did everything we could to support it.

“We have created a city centre retail strategy group which includes Liverpool One, the Metquarter, Land Securities, Lewis’s and ourselves. As a city centre, what we have tried to do is viewing it as Liverpool city centre plc. There’s a realisation within the city centre that, for Liverpool to prosper, everywhere has got to be strong – it’s not Darwinian, it’s not about survival of the fittest.”

Several retailers are opening stores in the city, some for the first time.

Liverpool One is at 97% capacity and is forecasting that it will be 99% full by the end of the year.

February saw fashion designer Kirsty Doyle, jewellery shop Pandora, ladieswear store Coast and the Centro juice and coffee bar open within the development, while independent Catalonian restaurant and delicatessen Lunya.

And it is not just Liverpool One, which opened less than two years ago, that is attracting new tenants to the city.

Aldi is to fill the vacant Woolworths store in St John’s Shopping Centre, while Clayton Square has added Clas Ohlsen, Mothercare/Early Learning Centre, and Maplin Electronics to its portfolio.

At the other end of Church Street, the Metquarter has also brought in some new names despite retailers’ struggles.

Metquarter’s marketing manager Jennina O’Neill said: “Unfortunately, there is a national picture where retail has been affected by the economic climate.

“However, we feel that Liverpool has shown signs of resilience during the last year and this has given Metquarter the ability to attract fantastic brands such as Jo Malone, Mococo, Claudia Pink along with the MAC Cosmetics expansion to double their square footage.”

Metquarter is sometimes perceived to be the loser from Liverpool One’s success – about one in six of its 48 units are currently empty, although they are mainly its smaller stores – but she rejected the idea that it was affected by its near-neighbour.

“On the contrary, we view Liverpool One, like Metquarter, as something very positive for the city,” she said.

“They are two very different offers – theirs is more high street, while ours is aspirational and appeals to the more high-end shopper.

“We are optimistic that the retail sector has come through the worse of the recession.

“People in Liverpool and Merseyside have always spent money on looking good – that is not going to stop – and we are looking forward to offering them our unique shopping experience.”

Mr Gibbons also sees positive signs, although he is not getting carried away.

He said: “There’s certainly a greater confidence now. Whether that’s psychosomatic, I don’t know.

“People are looking forward to the rest of the year.

“People aren’t massively overjoyed with the current climate, but my feeling is we are moving off the bottom.”