CHICAGO (TheStreet) -- It's an early November retail ritual: the minute the inflatable skeletons and light-up pumpkins are packed into storage, out come the inflatable Santas and light-up menorahs.
The upcoming months are do-or-die for stores throughout the U.S., from department store mall anchors to independent mom and pop shops. According to the National Retail Federation, holiday sales represent almost 20% of all retail sales for the year; for some companies, up to 40% of their annual revenue comes in November and December.
The past two years were more about Scrooge than Santa. With worries about the economy and job losses, shoppers cut back on their spending. They focused on practical items, and their obsession for bargains forced many retailers to offer deep discounts. That meant profits were minimal, even when sales numbers inched up.
How is this season shaping up? So far, it looks like a reprieve from the Scrooge-like mood of the past two years. The federation estimates that holiday sales will increase 2.3% this year, after remaining flat last year and falling 4% in 2008. While shoppers will be spending more, they remain diligent about assessing what and how they're buying."While consumers have shown they are once again willing to spend on what's important to them, they will still be very conscientious about price," says NRF chief economist Jack Kleinhenz. "Retailers are expected to compensate for this fundamental shift in shopper mentality by offering significant promotions throughout the holiday season and emphasizing value throughout their marketing efforts."
Here are the main trends that will affect how holiday shoppers go about their search for the perfect presents:
Not surprisingly, when shoppers were asked how they would decide where to shop, most cited price as the most important consideration. While that gives discounters an advantage, smaller stores will continue to use sales and coupons to draw customers.
People want to feel they're getting a good deal, but they're open to the idea of paying a little more for something that lasts longer -- especially when buying something special for a loved one. Making a pitch for value rather than just price can be a winning strategy for independent businesses that can't compete with Wal-Mart