Retailers Prepare for Holiday Rush

Nov. 14, 2006— -- The weather outside is colder, the days are growing shorter, and for the nation's retailers that means only one thing: It's the "most wonderful time of year."

The holidays are upon us, and retail merchants are prepping for the yearly onrush of shoppers.

And they need shoppers to come out in force. The holiday buying season typically accounts for one-third of retailers' annual profits and more than a quarter of annual sales, according to the International Council of Shopping Centers.

So as T.M.X. Elmos fly off the shelves and video gamers eagerly await new game consoles from Nintendo and Sony, retailers hope gas prices and recent wage increases, along with early sales promotions, will put shoppers in a spending mood.

Early forecasts suggest stores will ring up solid sales growth this year, but maybe not as strong as previous holidays.

The National Retail Federation expects holiday spending this year to top $457 billion, a 5 percent increase over 2005 but lower than last year's 6.1 percent increase. Industry analysts concur, predicting that holiday retail sales will increase 3 percent to 7 percent.

If the forecasts hold up, the average shopper will spend $800 this holiday season -- up more than $50 from last year, according to the National Retail Federation.

Retailers and analysts optimistically believe that a combination of factors will come into play: Lower gasoline prices, expectations for a mild winter, and less expensive heating bills could leave many consumers feeling flush with cash.

And during the holidays, many consumers are willing to overlook tight budgets and buy things on credit.

Marshal Cohen, chief industry analyst with the research group NPD, said consumers had shown they would spend during the holidays regardless of economic conditions.

"You have to cut up their credit cards, take away their wallets, basically lock them in [a] room to get them to stop spending and buying things," he said.

Bear Stearns analyst Christine Augustine said this year would be a "digital Christmas" similar to last year.

Hot items include flat-screen televisions, iPods, digital cameras, and new video game consoles from Sony and Nintendo.