Great deals aren’t likely for shoppers this holiday season

Shoppers lining up for the predawn deals tomorrow might be among the few who get a break this holiday season.

Retailers, facing another tough holiday selling season, likely will have less merchandise on hand this year. That means those deep discounts available in 2008 won't be as prevalent this year.

"Last year was about the consumer. This year will be about the retailer," said Doug Sandler, founding partner and chief equity officer for Chesterfield County-based Riverfront Investment Group.

And as consumers head out to stores tomorrow -- known as Black Friday, the traditional start of the holiday selling season -- they still are faced with numerous economic obstacles, experts say.

But merchants are better prepared to handle cost-conscious consumers who are expected to spend less because of lingering concerns over high unemployment, tight credit and pay cuts, Sandler and other analysts say.

Many retailers last year were caught off-guard and had too much inventory. That forced them to cut prices dramatically in an attempt to entice buyers into their stores, which in turn hurt profit margins.

"Last year, there was some hope that consumers were coming back. This year, I think most [hope] has been given up," he said.

The National Retail Federation predicts that sales during the final two months of this year will fall 1 percent to $437.6 billion from the same period in 2008 despite consumers having an extra day to shop between Thanksgiving and Christmas.

If the predictions come true, it would be the second straight year that sales have declined during the holiday shopping period after a 10-year average growth rate of 3.39 percent. Last year, sales fell 3.4 percent, the first drop in decades.

Retailers have prepared for a down season, but consumers looking for late deals might not find them, said Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University in California.

The "message to consumers is, 'You can't hold back this year.' If you hold out too long, you might not get anything," Kalyanam said. "You might find the sweater that's marked down, but you might not find it in your style and size."

Kent Engelke, chief economic strategist and managing director of Capitol Securities Management in Richmond, said low inventory levels could cause higher prices for consumers.

"If demand quickly accelerates with minimal inventories, potential shortages could occur, hence creating pricing pressures," he said.

But it's not only the amount of inventory that has changed at retailers, it's the type of merchandise they carry, Kalyanam said.

"Retailers who have compelling merchandise will be able to do much more full-price business," Kalyanam said.

The changes to inventory control and marketing for the holiday season are permanent. "What retailers have done is adjusted to the new normal. Last year was not a one-time shift."

To help boost sales this year, retailers began advertising sales earlier in November and will have special deals through this weekend.

The economy, though, likely won't keep shoppers at home tomorrow.

The National Retail Federation predicts that 134 million people will hit the stores and malls this weekend, a 4.7 percent increase from last year.

A survey by the International Council of Shopping Centers found that many shoppers -- 36.2 percent -- plan on going to stores between 4 a.m. and 8 a.m.

Contact Louis Llovio at (804) 649-6348 or .