Oct 7, 2010

Shoppers may have the upper hand this ChristmasBy Anne D'InnocenzioGoogle.com

New York — The Christmas shopping season doesn’t kick off for another six weeks, but retailers already are signaling they’re prepared to discount aggressively if needed to entice shoppers still skittish about spending.

Stores expect gift buyers to scrutinize every purchase, from $20 toys to $1,000 designer jackets, and to limit how many stores they visit.

Most forecasters aren’t expecting shoppers to spend much more than they did during last year’s tepid season, when sales rose only 0.4 percent after slumping 3.9 percent a year earlier, according to the National Retail Federation’s calculations.

“The consumer is being very restrained. They’re closely planning their spending and continue to reduce their shopping trips,” said James Russo, vice president of global consumer insights at The Nielsen Co.

A lot is riding on holiday sales because they account for up to 40 percent of annual revenue for many retailers. For toy merchants, it’s up to 50 percent.

In an address to investors late last month, J.C. Penney Co.’s Chairman and CEO Mike Ullman said that the department store chain was prepared to discount this Christmas season to bring shoppers in, after holding back a little last year.

“I think this year we have chosen to take a bit more pricing liberty,” Ullman said.

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