With six days until Christmas, the U.S. holiday shopping season is better than expected, with discounts deep enough to bring in shoppers who are searching for bargains but not showing the desperation seen in the recession.
Department stores like Macy's Inc
Some of the women's retailers that were doing well earlier in the year are getting hurt this holiday by the resurgence of the department store, said Craig Johnson, president of Customer Growth Partners, a retail consulting firm.
Customer Growth Partners, which has been one of the most bullish forecasters of sales heading into the holiday season, estimated that U.S. retailer sales on Saturday were $26 billion, just shy of the $27 billion spent on Black Friday, the day after Thanksgiving, which traditionally kicks off the holiday shopping season.
Johnson was one of the most bullish forecasters coming into the holiday season. Now others are joining suit.
ShopperTrak, which monitors traffic at shopping malls, now expects sales in November and December to rise 3.7 percent, up from its September forecast of 3 percent.
Last week, the National Retail Federation raised its forecast, calling for holiday sales to rise 3.8 percent. In October, it forecast a gain of 2.8 percent.
To be sure, that NRF forecast is still less than the 5.2 percent increase reported for 2010. Unemployment was still 8.6 percent in November and lower-income shoppers have been making use of such plans as layaway to paying for holiday items.
So many analysts said sales are not exceptionally strong or exceptionally weak.
There's more that's normal here than people want to let on, Edward Jones analyst Matt Arnold said.
ShopperTrak cofounder Bill Martin said that discounts were more in the 30 percent to 40 percent range, instead of the 50 percent to 60 percent seen last year.
On Saturday, he said it was hard to find parking spaces at the malls he visited and he saw lots of people with packages. In other words, it was a typical weekend before Christmas.
It's been a typical shopping pattern, he said.
Overall, traffic to stores may be off a couple of percentage points. But that's because more people are shopping on line, he said.
IBM Benchmark, which tracks transactions on the websites of hundreds of the top retailers, said on Monday it now expects online sales to rise 9.5 percent to 10 percent in December from a year ago.
Trutina Financial Chief Investment Officer Patty Edwards said what she saw at Target this weekend was stocked shelves and normal discounts.
There weren't any specific markdowns that were overly compelling, but conversely, there didn't seem to be any shortages of items at all, Edwards said
WANT A DEAL? BUY A COAT
Even with retailers managing their pace of discounts and avoiding desperation, higher costs for cotton and other materials are taking their toll. Many retailers' gross margins are likely to decline this holiday season, according to data from Thomson Reuters I/B/E/S.
Over the weekend, 40 percent discounts seemed to be the cost of doing business, said Nomura Equity Research analyst Paul Lejuez, who follows apparel retailers, adding that promos are likely to intensify this week.
Among the retailers offering such discounts were Abercrombie & Fitch Co
Mild weather has cut into sales of winter clothing, said independent retail analyst Brian Sozzi.
Coats are offering some of the best deals in the mall right now, he said.
One of the featured items on Macys.com on Monday was women's coats for 40 percent to 50 percent off.
Those cold temperatures that you typically experience in December just haven't been there, said Joe DeRugeriis, senior marketing manager at Planalytics, which provides weather consulting services for businesses.
People are still going to spend the cash, he said, but the cash is moving to things more like electronics and not those items that normally sell well this time of the year.
(Reporting by Brad Dorfman in Chicago; additional reporting by Jessica Wohl in Chicago, Lisa Baertlein in Los Angeles and Nivedita Bhattacharjee in Bangalore; Editing by John Wallace, Lisa Von Ahn and Steve Orlofsky)