Retail Therapy Is Cheaper Than Ever

BOSTON (TheStreet) -- The lingering hangover of the recession has replaced the one-time mantra of "shop till you drop" with the new pricing strategy of "drop till they shop."

America has gone on sale, from traditional holiday gifts like electronics and basics such as food and housing to big-ticket items including cars.

Retailers are expecting the worst this holiday season after American shoppers from around the country said a year ago they planned to spend an average of $431 on gifts in 2008, a drop of 50% from a year earlier. Consumers will follow the same spending pattern this year, according to a poll by Harris Interactive.

Books and movies are taking front and center of the holiday season's price wars. Wal-Mart (Stock Quote: WMT), Amazon (Stock Quote: AMZN) and Target (Stock Quote: TGT), in particular, have escalated tit-for-tat out-pricing on DVDs, Blu-ray discs and best-selling books. In the case of DVDs, when Amazon instituted a $9.99 price point for select titles, Wal-Mart retaliated by undercutting the Internet retailer by a penny.

Not only big-box stores are offering discounts to lure shoppers. Even upscale retailers like Tiffany (Stock Quote: TIFF), Coach (Stock Quote: COH) and Williams-Sonoma (Stock Quote: WSM) have cut prices as the recession dragged on longer than at any time since the 1930s.

Starbucks (Stock Quote: SBUX), home of the $6 coffee, has dropped the price of lattes and iced coffee in some markets. How do you say "bargain" in fake Italian?

Across a slew of sectors, bargains and price breaks intensified as 2009 draws to a close, leading up to a holiday-shopping season that may make or break some stores.