FORGET about Christmas shopping in New York. Okay, you'll miss iceskating at the Rockefeller Centre, Macy's magnificent festive window displays, and maybe even snow in Central Park. But, if you're in search of a bargain, there's only one place to go. Manhattan, eat your heart out. The people's choice for seasonal shopping is Newry.

The streets are jammed with southerners. Everybody's here. The Mercs and BMWs pull up in the area around the Quays, home to many exclusive stores. But in the shopping centres and side streets, pensioners ply their trolleys with cheap booze and toys for the grandchildren. Many bring order lists from their friends.

Newry is only a few miles across the border but these visitors aren't just from Dundalk, Drogheda, or even Dublin.

Some have travelled from Limerick, Cork and Tipperary.

Newry Chamber of Commerce says 40% of Christmas trade is from the south.

So strong is the southern invasion that some locals feel threatened. "They're worse than the Brits when it comes to taking a place over, " says one resident. "We can hardly get into our own shops at the weekend, there are so many southerners. They're literally snatching the stuff off the shelves. It's absolute madness."

But the vast majority of locals welcome the influx. The big attraction is the prices. Alcohol can be 30% cheaper and there are also significant savings to be made on food, clothes, cosmetics, and toys.

Newry's two shopping centres . . . the Buttercrane and the Quays . . . offer free parking, something their southern equivalents don't. And almost everything in the town (officially it's a city but let's not fool ourselves) is within a fiveminute walk of everything else.

In Dunnes off-licence, the most popular buys are 30 bottles of Miller draught (£15); 12 bottles of draught Guinness (£9.99) and 70cl bottles of Smirnoff vodka (£9.99).

"We get a lot of pensioners in here, " says manager Martin Kennedy. "Free travel in the trains from the Republic is a big incentive."

It's only midday and already Carmel Couglan (74) and Lily Doyle (70) from Palmerstown have filled their trolleys. "I wish we'd bigger ones, " says Carmel. "My husband is a Guinness drinker so the offer in Dunnes is great and Lily's girl likes Miller.

"We're going to Sainsbury's now because we've heard the John West salmon is cheap. You can get a big tin for 3.00 . . . you wouldn't even get a wee tin at home for that."

The women have bought teddy bears (three for £13.98) and Bratz dolls (£9.99) for their grandchildren in Woolworths.

The taxi depot in the mall has been renamed 'Euro cabs'.

"There's a bus taking southern shoppers from the town centre to the train station but if people miss it they come here, " says Anne Loughran, whose husband owns the depot.

"They've so many bags, the poor wee hands are broke off them. Sometimes, it's hard to fit all the shopping into the taxi.

When they come to us, they've spent all their money but they're always so happy with their bargains. Drink, chocolate, marmalade and health food are the favourite buys."

There are so many southerners in the Buttercrane Centre that a bureau de change has opened, even though all the shops accept euro. Meanwhile, any stressed-out shoppers can avail of a free blood pressure check in the DrChina health store.

Overseeing the retail bedlam is manager Peter Murray.

"The better roads north have brought Dublin closer to us.

You can drive from the airport to Newry in an hour now without breaking any laws."

While there were always southerners who shopped up north, the IRA and loyalist ceasefires mean there are far more of them, he says. "Before 1994, there were 30-year-olds in Carrickmacross, a few miles down the road, who had never been in the north. Those, who are still slightly nervous, see Newry as a good choice for a first trip because it's not too far over the border."

Certainly, parents are at ease bringing their children.

There's a big queue of southerners for the Buttercrane's Santa who they all think is great value: £3.95 for a visit, parcel and two photographs.

In Millett's store, Brid McDonagh from Dublin is buying her children googles and socks for a New Year ski holiday.

Her sister Liz is purchasing a pair of funky washing-up gloves trimmed with pink fur and pearls (£12.99) in Cook Stop.

"We're selling a lot of aga cookware and gadgety things like turkey lacers to Dubliners, " says the shop assistant.

"Newry is a great day out for us, a bit of craic, and it offers a different choice of goods to what we have at home, " says Brid.

Southern customers in health food store Holland and Barrett are snapping up St John's Wort, gingko bilbo, highstrength B12 and multi-vitamin supplements. EU regulations, which so far don't apply in the North, have banned over-the-counter sales of these products in the Republic, the shop manager says.

But it's not all serious purchases. Men are buying Madame Fifi . . . a festive black and red underwear range . . . as well as Miss Santa outfits for their partners in Ann Summers.

Female shoppers head elsewhere. Boutiques like Place of Dress in Drumalane Mill and Dali in Francis Street, which stock a wide range of labels, attract women from places like Malahide who find it quicker to drive to Newry than to Dublin city centre.

Julie McKenna of Place of Dress says women might also see a coat they like in Brown Thomas but purchase it in her boutique because it's good value and has a more intimate service.

The Quays is Newry's shiniest shopping centre. Some stores like Debenhams give 71 pence to the euro, two or three pence more than the banks, says manager Cathal Austin.

"Combine that with more competitive prices than across the border and it's hard to beat."

Austen says most goods in Newry are 15% cheaper than in the republic with the biggest savings on cosmetics and alcohol.

"I don't know why a pint is the same price in Dundalk and Newry but beer in a tin is so much dearer."

In Semi-Chem, which sells cosmetics and toiletries, assistant Ralph Patterson says retailers from the Republic find it cheaper to buy produce from the Newry store rather than from their own wholesalers: "They come up here to stock up."

Gillette Mach 3, four blades 6.52; 'Flawless Finish' foundation, Elizabeth Arden, 14.93; and Calvin Klein 'Crave' 40ml eau de toilette for men 17.92, are among the best-sellers.

"Sunday is particularly mad. They flock up after 12.30pm mass in Dundalk. The shops have hardly opened and they're full, " says Ralph.

Anne Casey from Lusk, Co Dublin, is one of Ralph's most loyal customers. She can't get enough of northern shopping.

In the last five days alone, she's been to Enniskillen, Downpatrick, and Newry.

"I buy everything . . . groceries, colour for my hair, cat food, toys for the kids. Santa in the north is very generous.

The only things I buy in the Republic now are bread, milk and the newspaper."

Newry isn't all about big shopping malls. Its 'cathedral quarter', centred on Hill Street, is home to many independent retailers.

"We must retain the individual, the personal, and the different, " says Declan McChesney of Cahill Brothers' shoes.

"Otherwise, we'll be bland, just like every other city centre in every other part of the world."

Established in 1894, it's Northern Ireland's oldest shoe shop. The mainly Italian merchandise is generally 15 cheaper than in the Republic, Declan says. Even if you don't need shoes, the craic makes Cahill Brothers worth a visit. An Irish language sign hangs over the door. Inside, Declan drinks coffee from a Union Jack mug. "You have to annoy people at least now and again!" he says.

The other day, two Dublin women arrived in the shop with suitcases which they filled with shoes. People can bring home what they please now but Declan remembers when serious restrictions existed on what shoppers could take across the border.

"The southern women would buy big boxes of washing powder, pour them down the ladies' toilets and stick videos in the boxes so they could pass through customs. Newry had the cleanest sewers in the world, but Trevor Sargent would have had a heart attack!"

Today's southern shoppers have a nickname. "We'd two women in from Blanchardstown. Their friends were against going up north after all the trouble and killing, but these women persisted. They saw themselves as 'the Mexicans' going into 'Orange County'. They wondered what the Orangies would do. They'd a great time and went back and told their friends it was safe for 'the Mexicans' up here."

Across the road is Jack Murphy Jewellers. The Wedding Journal Bride of the Year from Drogheda has just left with her fiance after choosing their wedding rings. Jack, who has been in the business 50 years, goes to Antwerp three times a year to buy diamonds. "They have to dance on the finger, " he says. "Ours are bigger and brighter than anywhere in Ireland."

It's not just the better value that attracts southern customers, he says. It's the more personal service.

"I'd a Limerick guy buying a ring. His girlfriend loved Audrey Hepburn and Breakfast at Tiffany's so he wanted to give her the ring outside Tiffany's on Fifth Avenue. He was very nervous and I promised that if she didn't like it, I'd change it. She rang me when she came home. She was over the moon."

Never worry if you can't afford diamonds. Newry still has something for you. Wild Child in Bridge Street offers body piercings at very reasonable rates.

"You'd pay 50 for just one piercing across the Border, " says the pale black-haired girl behind the counter. "We do three piercings for £50 . . . any orifice you want."

SAINSBURY'S Sainsbury's, in the Quays' shopping centre, is the main attraction for many southern shoppers because the store hasn't opened in the Republic.

It sells 150,000 tins of sweets and 100,000 selection boxes at Christmas . . . more than any of its other UK outlets . . . and a huge proportion of these are bought by customers from across the border.

Confectionary and alcohol are its best-sellers. A spokeswoman said that savings of 10 per case of beer and 10 on litre bottles of spirits were available compared to the Republic.

At Christmas, Sainsbury's in Newry outsells all the group's other UK branches in Budweiser, Miller Genuine Draft, and Jameson's whiskey. In the fortnight before Christmas, the store turns over almost 1.2 million a week.

While other Sainsbury's branches take on 20-40 temporary staff at Christmas, the Newry branch recruits 200 to deal with the huge customer invasion.

Sainsbury's won't say which particular food-stuffs are the most popular. But when the Sunday Tribune visited its raspberry cheese-cake, spinach and ricotta pizza, shredded aromatic crispy duck, and French-style pork cassoulet were in high demand.

EAT, DRINK, SLEEP The Shelbourne cafe and home bakery in Hill Street provides shelter from the shopping frenzy outside. There's a fabulous selection of breads and cakes, all made on the premises. The apple pie is to-die-for and the cherry and walnut cake is also a big hit. The Shelbourne has just won an award for its childfriendly premises.

There's only one choice for a night in Newry. The Canal Court Hotel, bang in the middle of town, is the place to be. Northern Ireland doesn't normally do hotels well. Compared to southern hotels, they're stiff and muted. But the atmosphere in the Canal Court hits you the moment you cross the door.

Book a room on the top floor, overlooking the cathedral and the canal, to see Newry in its nocturnal glory. There's live jazz on or you can spend the evening in the Merchant's piano bar. Make sure you visit the Granary bar. Everybody in Newry calls in for at least one drink on a weekend night.

There's decent music too. Frances Black, Bagatelle and Brian Kennedy feature in the current line-up. Originally, southerners came up for just a day's shopping but many now opt for a weekend. The Canal Court offers a two-night break with a five-course dinner for £119 per person.