The holiday shopping season officially kicks off on Friday, but many consumers who would normally cash in on day-after-Thanksgiving sales will be home picking on leftover turkey this year, Wall Street analysts say.
With a war raging in Afghanistan, immense layoffs at home and a roller-coaster stock market creeping out investors, analysts believe this will be the worst holiday shopping season in a decade.
"This is going to be one of the most challenging holidays," said Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd. "We are holding our breath and watching. The cast is set, and it is a matter of what the consumer does."
Retailers have anticipated this wallet watching but are pulling out all the stops to get consumers to spend, such as starting more intense promotions earlier than last year, permitting shoppers to negotiate prices and enticing shoppers with unique extras.
Bergdorf Goodman is dispatching trucks of designer clothes and furs to the suburban homes of their best customers, who are nervous about traveling into Manhattan.
Saks Fifth Avenue is offering free blow dries and nail polishing on certain Thursday nights at its New York store, with plans to roll the service out nationwide.
Shopping malls have tightened security to put consumers at ease about lingering in public places for fear of more terrorist attacks or anthrax scares.
Niemira expects that sales at stores open at least a year, known as same-store sales, will be up 4 percent this holiday. However, much of the growth will be driven by discounters, which for months have posted gains at the expense of department stores and apparel chains.
The Washington-based National Retail Federation predicts total holiday retail sales, which excludes restaurant and auto sales, will rise in the range of 2.5 percent to 3 percent, to roughly $206 billion. That would make it the worst retail performance since 1990, when sales were basically unchanged.
Last year, retailers rang up a modest $201 billion, up 3.9 percent from 1999.
A recent Conference Board survey of 5,000 consumers also isn't comforting, projecting that shoppers will be spending 6 percent less on holiday gifts this season.
Even e-commerce, which because of shipping logistics officially kicked off its holiday season more than a week ago, will probably be just ho-hum, dragged down by the slumping economy.
Jupiter Media Metrix predicts a modest 11 percent gain to $11.9 billion in holiday online sales; that compares to a 50 percent jump in the previous year. Already, Macys.com, Amazon.com and Brooksbrothers.com are aiming to jump start the season, with special free shipping promotions.
So far, fear of terrorism doesn't appear to have driven sales online from land-based stores, though it is still too early in the holiday season, according to Anthony Noto, an analyst at Goldman Sachs.
Stores like Federated Department Stores and Bergdorf Goodman, which had already planned for a conservative season, cut back where they could on orders, though merchants are still worried they have too much on the shelves. Fall merchandise already has been heavily discounted as have holiday items, making this one of the best Christmas seasons for consumers willing to open their wallets.
"Consumers are not going to keep their pocketbooks closed. They are in the malls, and they are not staying home," Philip H. Kowalczyk, vice president of Kurt Salmon Associates, a retail consulting firm. "They are looking for an opportunity to spend money, but the incentives have to be extra strong in order to offset the lack of confidence they have about the economy."
While the Thanksgiving weekend starts the shopping spree, it no longer is the busiest period of the season. Last year, the weekend accounted for 8.6 percent of holiday sales. The busiest period was the last week before Christmas, which accounted for 30.9 percent of holiday sales, according to the International Council of Shopping Centers.
The Associated Press contributed to this report.